GREEN BUDGET NEWS NO. 25 – 1/2010

EUROPEAN NEWSLETTER ON ENVIRONMENTAL FISCAL REFORM Founders:

www.foes.de www.eeb.org www.ecocouncil.dk www.levego.hu/ www.oegut.at

Chief editor: Dr. Anselm Görres Editors: Kai Schlegelmilch, Sebastian Schmidt, Saija Kononen, Jacqueline Cottrell

Contents

Quotations of December 3 1. EDITORIAL ...... 4 2. GREEN BUDGET REFORM IN EUROPEAN MEMBER STATES ...... 5 Paradoxical Privileges in Traffic Sector: German railway provider hopes for a change 5 Kai Schlegelmilch – The Eco- Man or the "Öko-Steuermann" 6 Dutch first in Europe to adopt green tax for cars 9 Ireland adopts for non-ETS sectors 9 Ireland: Carbon tax backed to lead to employment opportunities 10

Comment on Irish CO 2 Tax: Carbon tax can promote green economy 10

French minister offers CO 2 tax breaks for hauliers 12 France: Ségolène Royal Tries to Score by Opposing Carbon Tax 12 Austria’s Finance Minister Mitterlehner: New Eco-tax will come 13 French carbon tax deemed illegal 13 on Unhealthy Food – Takes Action against “Muffin Tops” 13 3. GREEN BUDGET REFORM ON EU-LEVEL ...... 14 Carbon Credit fraud causes more than 5 billion damage for European Taxpayer 14 Slovenia wins seat of energy regulators’ agency 15 Commission launches consultation on EU 2020: a new strategy to make the EU a smarter, greener social market 16 EU Environment Council conclusions on eco-efficient economy challenge Βarroso to reform Lisbon strategy 18 Think-tank leader: EU’s 2020 strategy ‘too short-termist’ 18 4. GREEN BUDGET REFORM WORLDWIDE ...... 19

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Japan’s Democrats opened the Policy Window for Market Based Instruments? 19 Japan industry unites against carbon tax 20 Indonesia plans carbon tax, geothermal push 21 : Economists: tax carbon to cut emissions 22 wastes hundreds of billions on perverse fossil fuel subsidies, says global coalition 23 5. COPENHAGEN SPECIAL ...... 23 Turn climate action into Apollo mission, says leading MEP 23 Obama’s Climate Policy: on Copenhagen, Emission Target and What has happened so far 24 Ahead of EU summit, Soros unveils climate finance plan 27 Copenhagen or Bust The time is now for an international deal on climate change 28 Brown and Sarkozy Proposing a New Tax to Finance Climate Change 29 France, Africa Want to Tax Banks to Finance Climate 30 NASA Climate Expert wants Copenhagen to Fail and Calls for Carbon Tax 31 “Enfants terribles” in Copenhagen 31 Russia and the Copenhagen Talks – a Sleeping Bear 32 Finance sector makes voice heard at UN climate talks 33

Opinion: If Copenhagen fails, should the EU adopt a CO 2 border tax? 34 OPEC fighting against adoption of carbon tax in Copenhagen 36 The Copenhagen Accord explained 36 Copenhagen Accord – Reactions 37 Sweden calls the summit a „disaster“ 39 6. LINKS AND PUBLICATIONS ...... 39 30th November 2009, What taxation for a low carbon economy? 39 Taxation trends in the 2009 edition 40 Scorecards for Best and Worst Environmental Policies 40 Coolproducts.eu 41 The Case for Green Fiscal Reform - Final Report of the UK Green Fiscal Commission 41 Carbon Tax – a Forgotten Climate Policy Tool? 41 International Fuel Prices 42 Deutsche Bank on Climate taxes 42 List of Environmental Taxes in Finland 42 Carbon Tax Center 42 7. EVENTS ...... 43 GBG Conference, Annual General Meeting and Adam Smith Price 2010 23 th /24 th April 2010, Berlin 43

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GBE Annual Conference 2010 43 AGRION Business Network for Energy Cleantech, sustainable Development 14 th January, Frankfurt 44 Présentation de l'étude "Une Union sans cesse moins carbonée ? vers une meilleure fiscalité européenne contre le changement climatique 44 The 11th Global Conference on Environmental Taxation 3 - 5 November 2010, Bangkok, THAILAND 44 8. IMPRINT ...... 45 Best wishes from the founders and the editors! 45 Green Budget Germany’s Team of Editors 45

Quotations of December

"The world was watching Copenhagen. The world has been sorely disappointed," Hubert Weiger, head of Germany's association for environment and nature protection, Bund, December 2010

"We have sold off our children's future and compromised that of millions of citizens,” Nicolas Hulot, French ecologist, the Journal du Dimanche, December 2010

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that a common declaration will be possible in the future. We keep on working on this. 1. EDITORIAL Green Budget Europe (GBE) has been active as well. Together with EEB, GBE organised a Dear readers and friends of Green Budget seminar on environmental fiscal reform in Germany, post-Lisbon EU . The seminar was held in Ma- Last December was not only about Christmas drid in November. This meeting followed up decorations and shopping, it was the month of on GBE’s declared aim of organizing events the Copenhagen climate conference – or prior to each EU Presidency. Speakers in- “Hopenhagen” as many said before, now they cluded GBE Steering Committee member rather call it “Flopenhagen”. The conference Yannis Paleocrassas and Jacqueline Cottrell has been keeping us busy here. One fruit of from the GBE office. Many additional GBE our work you will see when you just keep members also made contributions, including reading. Green Budget Germany proudly pre- John Hontelez and Aldo Ravazzi Douvan. A sents: a “Copenhagen Special” ! It is the fifth further event in Spain may be organized early chapter in this issue, giving some basic in- next year. formation but also discussing topics that have Of course GBE has been present on the 10 th not been all over media. You will get a good GCET in Lisbon in September. Vice- overview about the different viewpoints, Spokesman Kai Schlegelmilch gave several plans and reactions. presentations. Several Steering Committee There are also other ways we have been active members, e.g. Aldo Ravazzi Douvan, Paul regarding the conference. We sent informa- Ekins, and András Lukács gave presentations tion about us and Environmental Fiscal Re- and contributed to panel discussions. GBE form to be available for the visitors of the was thus substantially present and demon- conference. Prior to the conference we also strated that it is a major institution oriented sent letters to the world leaders to remind towards policy action, though also providing them about green taxes and green fiscal re- valuable scientific insights. form as an effective way to implement the Unfortunately the GCET conference website possible outcomes of the summit. GBG was was taken offline, including all papers etc., delighted to hear the UK Prime Minister and the day after the conference, so that almost no the French President proposing green taxes to information remains available. However, sin- finance help to developing countries. The gle papers and presentations can be requested global tax, the so called from the authors. , was not the only thing those men were talking about (see Chapter 5). One of our activities has been taking part in EU consultations. In November we contrib- For us in GBG this December also stood for uted to the EU consultation about the new taking steps for getting a wider basis to sup- Common Fishery Policy and in January we port our aims. GBG invited the representatives will take part in the consultations about the of German unions and many environ- EU 2020 strategy, the successor of the Lisbon mental organisations to discuss Environmental strategy. In this issue you will find a press re- Fiscal Reform . The debate was intense and it lease of EEB, one of our European partners, pointed out the differences in the viewpoints and an interesting interview on this topic. At but also showed us that the groups are inter- this point we would like to refer to EurActive ested in cooperation and there is strong faith (http://www.euractiv.com/en/HomePage ), a website

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reporting about and analysing the happenings 2. GREEN BUDGET REFORM IN in the EU from a community perspective. We warmly recommend! EUROPEAN MEMBER STATES The developments related to Environmental Fiscal Reform in other countries has always Paradoxical Privileges in Traffic Sector: been interesting for us. You can read about German railway provider them in this newsletter, both in EU member hopes for a change states and worldwide. Ireland has decided to [Saija Kononen, Green Budget Germany, introduce a carbon tax, France had already Wednesday, 2 December 2009] Air traffic still decided to do it, when just before the end of enjoys tax privileges in Europe, at the same 2009, the French Constitutional Court skipped time, in many coutries, railway traffic is dis- this plan and dismissed particularly the many advantaged. German national railway com- exemptions. In Denmark the government pany Deutsche Bahn (DB) hopes the new fed- wants to start taxing unhealthy food – we say: eral government to see the paradox. Equal why not tax environmentally harmful food?! treatment is one precondition for effective Fortunately there may be synergies and over- climate protection. lappings. Passengers travelling from Berlin to Munich Researching and conducting studies and pol- and back save each time 50 euros due to the icy papers have kept us busy also in the past exemption from oil (or kerosene) tax and eco- months. A policy paper commissioned by tax. Air traffic is not affected by emissions Heinrich Böll Stiftung will be published in trading at all, whereas railway traffic has to January. The paper will summarise our main tolerate higher electricity prices. There are goals, it will make a proposition about a sus- high indirect subsidies for travelling by an tainable way out of the crisis by using Envi- airplane in Europe and in Germany. The pas- ronmental Fiscal Reform and Market-Based sengers flying to visit some nice towns in Instruments. We are also working, commis- countries nearby – Vienna, Zurich, Brussels – sioned by Greenpeace, on a study about sub- get still another tax abatement: they are trav- sidies for coal mining in Germany. elling – unlike if they took an express train or Otherwise we have been packing and unpack- a night train – VAT free. The unequal treat- ing; the GBG moved in November to a bigger ment of air and railway traffic distorts compe- office, our new address is Schwedenstraße tition. It starkly discriminates against railway 15a, 13357 Berlin. From January 10 th , 2009 traffic. on, we will have a new telephone number: In traffic sector the CO emission rates keep 0049(0)30 762 3991 30 2 rising, nevertheless there are only a few sound This year many things will happen; the next linkage mechanisms to encourage energy sav- GBG conference will be held in April, for ex- ing and reduction of emissions. In this case, ample. We hope you had a productive and ex- as a matter of fact, it is the total opposite: the citing year 2009 and relaxing holidays. The particularly climate friendly way of travelling whole GBG and GBE crew wishes you all the is suffering and at the same time the most best for this new decade and pleasant reading harmful way is subsidised. It is impossible for moments with Green Budget News! a railway company to bear up against the so called low-budget airlines like Ryanair which Your GBG Editorial Staff underpin their image by saying that they give the taxes back to their passengers.

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“If you want to get the passengers on the rails, the next five-year-plan for the People’s Re- you will have to create circumstances where public, things will hot up for Kai both means of transport have similar taxa- Schlegelmilch. Hardly anyone in Berlin is tion”, says Joachim Fried, competition repre- waiting for the results with as much expecta- sentative of DB, in mobil (10/09). “In 2008 tion as this man. If all goes well for DB paid almost twice as much charges and Schlegelmilch, the Chinese government will taxes for energy as in 1998. In comparison introduce a CO 2-tax in their Five-Year-Plan with other European countries, railway traffic for 2011 on. This would mean an eco-tax for has the highest, way above others, energy tax the biggest polluters on earth – and the blue- in Germany”, notices Hans Jürgen Witschke, print for it was written by an ordinary desk of- head of Energy department of DB . Actually, ficer in the German Environment Ministry. in France, Belgium, Switzerland and many This is because Schlegelmilch has been the other countries travelling by train is totally international coordinator of the working exempted from taxes. In Germany DB pays group on economic instruments for energy ef- 1,14 cents per kilowatt hour. ficiency and environment, also comprising environmental taxation, in the ‘China Council The intended expansion of emissions trading for International Cooperation on Environment scheme could make the competition situation and Development – CCICED’ ( www.cciced.net ) even worse for DB. According to a new prog- for the past two years. The project was fi- nosis of the Centre for European Economic nanced by the German implementing agency, Research (ZEW) the costs of the emissions German Technical Cooperation GmbH (GTZ, trading could almost triple to 300 mio. by www.gtz.de ). 2013. The ZEW-study points out that the higher costs could lead to decrease in market The Council is influential in China. Ever of railway traffic and foil the ultimate since its founding 17 years ago, the majority goal of emissions trading: If person and goods of its recommendations has been put into transportation shift from rails in the air or on practice. In mid-November, the Council ar- the highways, CO 2 emissions threatens to rise. gued in favour of a CO 2 tax, and now the Ber- That is why Rüdiger Grube, Head of DB, an- liner’s proposal is lying on prime minister nounced in mobil : “We are going to push Wen Jiabao’s desk. changes in Brussels and Berlin with persis- tency and patience”. The simplest and the en- The proposal is still up for debate in China, vironmentally soundest solution would be to but Schlegelmilch has already planted a seed abolish the subsidies for air traffic. of an idea in the next big Asian country. Last week, he accompanied the Vietnamese Vice Finance Minister Do Hoang Anh Tuan on a Kai Schlegelmilch – The Eco-Tax Man ten-day trip around Europe, visiting the fi- or the "Öko-Steuermann" nance and environment ministries. Vietnam is [Peter Ehrlich, “ Deutsch- planning taxes on energy intensive products, land”, 09.12.2009] Kai Schlegelmilch was detergent, cigarettes and kerosene. It may one of those who developed the eco-tax in seem opportunist, but Schlegelmilch is not be- Germany. Now, he is exporting the concept to ing used by finance ministers worldwide to the rest of the world. The man from the Fed- find untapped sources of taxation. But, he is eral Environment Ministry has already nearly convinced: Taxes should provide a framework talked the Chinese into it and is currently for the free market economy – a framework working on getting the Vietnamese on track. which protects the environment. “Taxes are a market based instrument and in many cases In a few weeks, when the heads of China’s more effective than command and control”, Communist Party get together to decide on he says.

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Schlegelmilch became aware of the interde- Schlegelmilch kept on working, caring more pendence between taxes and environmental about substance than climbing the career lad- protection while studying political economy der. During his time working in China, he in Frankfurt/Main. In his thesis in 1993, he worked only part-time for the Ministry. Status proved that the economic policies of many symbols of success are not his world. His of- OECD states actively encourage environmen- fice in a ‘plattenbau’ (building made of tally damaging behaviour, rather than prevent- precast concrete slabs) at Alexanderplatz is ing it. Schlegelmilch continued working on tiny; the floor is littered with piles of papers these concepts at the Wuppertal Institute for and dossiers. The view from the window re- Climate, Environment and Energy and as veals a huge construction site. guest researcher at the new European Envi- ronment Agency in Copenhagen. His boss is Schlegelmilch has found his calling. He also the social democratic environmentalist politi- campaigns for eco-taxes in an environmental cian and supporter, Ernst Ulrich von NGO – as a vice chairman of Forum Ökolo- Weizsäcker. gisch-Soziale Marktwirtschaft (FÖS)/ Green Budget Germany). When he leaves his office Even in the conservative camp, resistance to go to the FÖS, he dutifully shows his time- weakened as time went by. By the mid 90s, card and checks out of the building. 15 min- even the Christian Democrats become enthu- utes by underground and he is standing in the siastic about eco-tax. The former leader of the NGO’s new office in Berlin-Wedding. The CDU/CSU parliamentary group, Wolfgang name of the NGO used to be ‘Förderverein Schäuble, called on his parliamentary execu- Ökologische Steuerreform’ [Association for tive director, Hans-Peter Repnik, to work out an ecological ] and started as little an eco-tax concept which promised many more than an extension of the Wuppertal In- dividends: higher taxes on exploitation of the stitute. Schlegelmilch wrote many parts of the environment should make lower social secu- first memorandum. “It really got started four rity contributions possible, thus reducing la- or five years ago“ says the 44-year-old. In the bour costs. The plan failed mainly because of meantime, the organisation has found spon- the Bavarian CSU and its former group leader sors and members from business and has be- Michael Glos. come self-financing, as staff in the four-room office e.g. offer their expertise to other NGOs. Once the red-green coalition took over in 1998, the time had come for eco-tax pioneers. What drives a man to occupy himself with the Schlegelmilch’s boss von Weizsäcker became same topic day in, day out – both profession- elected Member of Parliament in the ally and in his spare time, unpaid and often Bundestag and took Schlegelmilch to Berlin late in the evening? Schlegelmilch made his with him. The young expert soon switched to decision early. After his bank apprenticeship the Ministry for the Environment, Nature and military service he became an environ- Conservation and Nuclear Safety mentalist. “As a banker I would work eight (www.bmu.de ). There he worked on environ- hours a day for one thing and in my spare mental tax reform and on EU energy taxation time for the opposite. I decided I would rather during the German EU Council Presidency. be on the right side for twelve hours.” At that time it was easy to find support in Schlegelmilch is a convinced ‘green’ but not a politics. Federal Government even dared to ‘leftie’. He did not want to break with his promote the eco-tax in Germany with slogans Christian-liberal family even when he was like “more green energy, more sex” studying. In the village where he grew up, (http://www.bmu.de/oekologische_finanzreform/doc/6 Bad Vilbel, northeast of Frankfurt/Main, he 880.php ), even though the tax increase on elec- joined the Ecological Democratic Party ÖDP tricity, gas and petrol was not very popular. and not Joschka Fischer’s Green Party.

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Schlegelmilch also lives as sustainably as who makes sure that legislation in other coun- possible. His low-energy wooden house in tries makes those technologies attractive. He Rahnsdorf, south-east of Berlin, where he hopes that the debate will now start again in lives with his wife and two children, uses rain Germany. After all, in the 90s the new finance water for the toilets and generates its own minister Schäuble was interested in the eco- electricity from a 1.7 kilowatt photovoltaic on logical impacts of taxation. Gerhard Schröder, the roof. The used car he took over from his the chancellor responsible for the introduction parents back in the 80s was his first – and his of the eco-tax, was sceptical when implement- last. Today, he takes the train as much as pos- ing the reform. At the end of October, sible. “He knows European sleeper connec- Schlegelmilch accidentally met the former tions by heart”, says FÖS President Anselm chancellor in a hotel bar in Wuhan, China, Görres, half joking, half in admiration. He and introduced himself as one of the co- takes the train as far as Madrid: for him, fly- authors of the law. It was a good thing after ing is unavoidable only when he goes to Asia. all, says Schröder today. Then, they drank a toast together, in the middle of China, to the “The ambassador of German environmental German eco-tax. policy”, Görres calls him, who works as a management consultant in Munich; some- times also “eco tax Google” because of his encyclopaedic knowledge. On top of this, Schlegelmilch can rely on a worldwide net- work. According to Görres: “There are only few countries in the world where he cannot name three to six people working on themes like eco-tax”. In the meantime, his network not only covers tax experts. For more than two years, Schlegelmilch has been active in the Ministe- rial division dealing with wind energy and electricity networks. He was in Chile this summer, in a country, which would have plentifully renewable energy if adequate net- works were available. “They just created a post for an energy minister”, says "Ambassador of German environmental policy": Schlegelmilch delighted. The new leader of Eco-tax expert Kai Schlegelmilch on the roof of the department, Marcelo Tokman, used to be the company Evergreen Solar in Berlin the leader of the Energy Commission with FTD/Marc-Steffen Unger which Schlegelmilch has cooperated for Published in German in the “Financial Times years. “The upgrading is a great success, also Deutschland” on 09.12.2009 in: for us, supporters from Germany”, he says. http://www.ftd.de/unternehmen/industrie/:green-minds- Tokman is also now a member of the net- kai-schlegelmilch-der-oeko- work: In July, the Chilean minister and the steuermann/50048452.html . The article was trans- German eco-tax expert met for the first time lated by GBG ( www.foes.de ). face-to-face at a conference in the capital of Chile, Santiago. While politicians talk about the of en- vironmental technology, it is Schlegelmilch

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Dutch first in Europe to adopt fewer stressed drivers, fatal accidents should green tax for cars fall 7 percent. [Saija Kononen, Green Budget Germany, The system could be used as a test case for Tuesday 17 November 2009 ] The Dutch gov- other countries weighing options for easing ernment is to become the first country in crowded roads. Singapore has a similar Europe to introduce a green tax for cars. This scheme for charging according to the amount will replace annual . This means that of travel and some big cities have created motorists will start to pay for using their vehi- congestion charges to control traffic in down- cle rather than for owning it . The goal is to town areas. eliminate the chronic traffic jam on the streets http://www.government.nl/News/Press_releases_and_n of the small country and reduce carbon emis- ews_items/2009/November/Kilometre_charge_for_roa sions at the same time. d_users Drivers will have to pay per kilometre driven. The Global Positioning Systems (GPS) de- Ireland adopts carbon tax vices installed in cars will track the time, hour for non-ETS sectors and place each car moves and send the data to a billing agency. According to the proposed [ENDS Europe, Thursday 10 December law, the information will not be stored, due to 2009] The Irish parliament has approved a data-protection concerns. carbon tax for sectors not covered by the EU's emissions trading scheme (ETS), starting at “The revenue generated will not exceed that €15 per tonne. The tax was one of several from the 'old' taxes. In fact, 59% of motorists measures proposed by the government as part are expected to pay less under the new sys- of its 2010 budget. tem” the government announced. The CO 2 will apply to transport fuels from When the plan takes effect in 2012, new car Thursday [10 Dec]. Petrol and diesel prices prices could fall by as much as 25 per cent will increase by €0.042 and €0.049 per litre with the abolition of purchase and road taxes. respectively as a result. The price of coal will Instead, an average passenger car will pay increase by €1.79 per 40kg. There are no ex- €.03 per kilometre, with higher charges levied emptions except for ETS sectors. during rush-hour and for travelling on con- The tax will also apply to non-transport fuels gested roads. The rate for passenger cars will (kerosene, marketed gas oil, fuel oil, LPG and continue to depend on CO 2 emissions. The tax natural gas) from May, pending parliament will increase every year until 2018, when it approval in January. The implementation will cost an average 6.7 cents per kilometre to deadline for solid fuels such as coal has not drive in Holland. The rate can be adjusted if it yet been decided. fails to change driving habits in the country, the Dutch Transport Ministry said. The tax is expected to yield €330m annually, well below the €500m revenue estimated by a The Ministry also said trucks, commercial ve- tax commission report in September. It will hicles and bigger cars emitting more carbon cost households an extra €2-3 per week. dioxide will be assessed at a higher rate. Green group Friends of the Earth welcomed The Dutch government expects the number of the tax but said it should be higher. cars on the roads to decrease by 15 percent, as The budget announcement also included an more people would switch to public transport extension of existing tax breaks for electric and cycling. With less traffic and perhaps cars and a car scrappage scheme of €1,500 for vehicles over 10 years old. It also included

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plans for a campaign to improve energy effi- “The investment and the jobs of tomorrow ciency in homes. will be low carbon and high-tech. The in- crease in my department’s allocation will go Ireland: Carbon tax backed to lead to directly into providing thousands of jobs for employment opportunities Irish people. We will make homes warmer and provide employment for the construction [Sunday Business Post, Nicola Cooke, Sunday sector as we insulate over a mil-lion homes 13 December 2009] The green technology and every public building,” said Ryan. sector was given a boost by a budget which would, according to Green Party energy min- “Every this department spends will be ister Eamon Ryan, result in ”thousands of focused on jobs for our people in the growing jobs”. areas of the green and digital economies.” Unlike most departments, Communications, However, the Irish Dairy Industry Association Energy and Natural Resources received a €5 (IDIA) said the tax would undermine the million increase on last year’s estimates, to competi-tiveness of exporters, and “give ad- take total funding (capital and current) to vantage to imported food products and place €517million. Sustain-able energy programmes jobs at risk in the food sector”. are the key priority, for which €98 million “The tax will increase costs at all stages of will be made available. Half of this funding food production,” said IDIA director Michael will be derived from the new carbon tax. Barry. “The farmer will pay a carbon tax on The national energy efficiency retrofit pro- fuel used in producing the food; the transpor- gramme will be funded to the tune of €50 mil- tation of raw ma-terials will be taxed; food lion. It will generate work for those in the processing will be subject to a carbon tax and construction sector who install new energy packaging, storage and dis-tribution will be saving technologies and materials. taxed,” he said. http://www.sbpost.ie/newsfeatures/carbon-tax-backed- Another €45 million will also be provided for to-lead-to-employment-opportunities-46204.html communications infrastructure, like the com- pletion of the national broadband scheme. Comment on Irish CO 2 Tax: Carbon tax The Green Enterprise Group and the Knowl- can promote green economy edge Society Taskforce identified a total of [Summarised by Saija Kononen from Sunday 110,000 jobs that could be created over the Business Post, Declan O’Neill,Published on next decade if the government’s strategy of a Sunday 06 December 2009] With just three low-carbon, high-tech economy was imple- days to go to one of the most challenging mented. budgets of recent times, the introduction of a new carbon tax is widely expected. Almost €13million will be spent on energy re- search next year, with a further €50 million However, concerns still exist as to how this ring fen-ced for the national insulation pro- tax will be utilised, with calls for government gramme, and €36 million on the re-fitting of to focus on establishing Ireland’s international low-income housing. reputation as a green economy, and not as an exercise in plugging the country’s fiscal debt. Ryan said the forecast €330 million generated from the carbon budget, would be used to The Commission on Taxation report recom- boost en-ergy efficiency and support rural mended the introduction of a carbon tax, and transport. specifically stated that the tax should be set at a level equal to the carbon price for emissions

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trading under the EU ETS (international price emissions are five per cent lower than they of emissions). However, as these prices adjust would have been without the carbon tax. Un- in line with demand and supply, there is a der a tax reform programme, Sweden intro- need for a floor price which can be monitored duced a carbon tax in 1991 when the govern- to ensure it remains effective. ment reduced general energy taxes. Based on a floor price of €20 per tonne of Sweden also provides subsidies or exemptions carbon, initial indications suggest that the for energy derived from renewable or sustain- government can expect to raise between €400 able sources, and official data shows that million and €500 million in 2010.The Eco- businesses have notably shifted their energy nomic and Social Research Institute (ESRI) sources from fuel oil to bio fuels. estimates that it will cost the average house- hold between €3 and €6 a week. This breaks In Denmark, a carbon tax was also adopted as down as €5 extra on a bag of coal, 50 cent part of a broader energy tax and subsidy more for a bale of briquettes and a five cent package. While nearly 6 per cent of Danish per litre increase in petrol and diesel. [editor’s tax revenues are made up of environmental note: the price was set at €15] taxes, the government also invested heavily in wind power, which created a viable alterna- However, as recommended in the Commis- tive for companies. Britain has implemented a sion on Taxation report, and also advocated range of environmental taxes, including the by the ESRI, this tax should be “revenue neu- climate change levy, a tax on commodities tral”, with revenue generated ring fenced to such as coal and gas, used by commercial cus- offset other taxes or reduce costs for individu- tomers, and the , which taxes peo- als or businesses. A recent report by Professor ple and organisations when they discard waste Paul Ekins, of University College London on landfill sites. Energy Institute, cautioned that a carbon tax, if simply introduced as a new revenue stream, Britain also provided a number of incentives would be “anti-competitive” and a burden on for growth in the generation of electricity industry. from renewable sources. The British govern- ment has set a stretch target of reducing its France is also considering the introduction of CO 2 emissions by 34 per cent by 2020 - a step a carbon tax in 2010, becoming the largest which, purely from a ‘green branding’ per- economy in the world to do so. Under the spective on the international stage, demon- most recent proposal, France would charge strates ambition and long-term policymaking. €17 for every tonne of CO 2 emitted in 2010, which is close to the actual market value of The introduction of a carbon tax can also be carbon quotas and Ireland’s proposed €20 the springboard to place Ireland in the fore- rate. To date, there has been no clear indica- ground as a location for companies and fi- tion how the revenue generated from the tax nance operations that specialise in supporting will be used. the rapidly expanding GreenTech, carbon and renewable energy industries. Lessons must be learned from other European countries that have pioneered this type of tax The recently-revised Programme for Govern- and used the tax to encourage changes in con- ment estimates that 127,000 jobs could be sumer behaviour. created in the ‘‘green and smart economies’’ - figures which, in the current economic cli- Finland was the first country in the world to mate, cannot be ignored. introduce a carbon tax in 1990. The tax has increased a number of times since its incep- Revenue from a carbon tax should be used to support the development of the green econ- tion. Official Finnish studies show that CO 2

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omy. It is important to recognise that much Green group France Nature Environment activity is already under way in Ireland to en- (FNE) said it was "dismayed" by the news. hance our green credentials. However, more Hauliers will take a decision on the offer by can still be done to reap the full effects of this Friday morning at the latest, a spokesperson activity. from road transport federation FNTR told ENDS. The Commission on Taxation recommended that the new carbon tax should be clearly The government is proposing a 75% tax re- visible at the point of sale to ensure that it duction in response to calls for higher wages. would not be seen as just another tax and that It would apply only to 2010 and amount to it should have the effect of influencing indi- €100m. The French senate approved the CO 2 vidual behaviour. tax in November but there are many exemp- tions already, including for maritime trans- We have already seen the positive effects of port. linking vehicle registration tax (VRT) to CO 2 emissions and providing extra business taxa- *On Tuesday the French environment minis- tion relieves for vehicles with lower CO 2 try launched a consultation on France's cli- emission levels. Perhaps some of the revenue mate adaptation action plan. A ministerial generated from the carbon tax should be used group will be created to finalise the plan by to encourage further use of eco-friendly vehi- April 2011 following a series of meetings cles. next year. http://www.endseurope.com/22831?referrer=bulletin& The Green Party has consistently said that the DCMP=EMC-ENDS-EUROPE-DAILY main purpose of the carbon tax is to change behaviour, and not to raise revenue for the France: Ségolène Royal Tries to Score by government. Opposing Carbon Tax The main aim of environmental tax reform [Saija Kononen, Green Budget Germany, must be the reduction of greenhouse gas Friday, 4 December 2009] The conservative emissions, and not to improve the efficiency president will introduce a of the economy. carbon tax next year. The last president can- Other countries have reaped the benefits of didate of the socialist party, Ségolène Royal, using their carbon tax regimes to promote in- opposes it. The eco-tax is “ecologically inef- vestment in alternative energy sources, while ficient” and “socially unjust”, Royal argues. She does not want to have “a tax robbing the reducing CO 2 emissions. Let’s hope that we learn from these experiences. buying power of the French people”. She also http://www.sbpost.ie/newsfeatures/carbon-tax-can- said she herself is “the best candidate for promote-green-economy-46082.html ecology”. She thinks there are better solu- tions, “taxing the super profits of oil compa- French minister offers nies” for example. CO 2 tax breaks for hauliers With these statements Royal is bringing the [ENDS Europe Thursday 10 December 2009] party leader Martine Aubry to a difficult posi- French transport minister Dominique tion. Aubry is seeking to close ranks with the Bussereau has proposed to partially exempt Greens who are supporting Sarkozy’s plans. road hauliers from a new carbon tax in 2010 The Greens have been criticising Royal for as part of negotiations over wages. Talks with her comments calling them “ridiculous”. the sector's representatives were still ongoing Sarkozy’s party is taking them seriously, when ENDS went to press on Thursday. though. In the time of the crisis it is difficult

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to sell such tax reform. In fear or social unrest If Austria was to do it alone it would not be Prime Minister François Fillon promised that disadvantaged in competition, as long as the the tax and burden of the private house- social security costs or income taxes were lo- holds is not going to rise due to the new tax. wered. Environmental taxes form only a 5,9 Either the or social contributions percent slice in Austrian taxation – it is under should sink to compensate. He announced that the EU average (6,4 %). the carbon tax will not be higher than 14 eu- http://www.nachrichten.at/nachrichten/wirtschaft/art15, ros per tonne in the coming years. That is 296327 about the market price. He also rushed to promise that the private household are going to be exempted, which annihilates the whole French carbon tax deemed illegal idea about bringing the people to save energy. [Deutsche Welle, Wednesday, 30 December Environmental organisations criticises the U- 2009] France's Constitutional Council has turn of the government. struck down a carbon tax that was meant to take effect on January 1. The council, which To the question why Royal wants to tackle the is charged with ensuring the constitutionality environmental policy of the government of French legislation, said too many polluters Frankfurter Allgemeine Zeitung finds two an- were exempted in the measure and the tax swers: Royal wants to get out of Aubry’s burden was not fairly distributed. shadow and she tries to get votes in her own district in the run-up to the local elections. It was estimated that 93 percent of industrial emissions, including the emissions of more Austria’s Finance Minister Mitterlehner: than 1,000 of France's top polluting industrial New Eco-tax will come sites, would be exempt from the tax, which would have charged 17 euros per ton of emit- [Saija Kononen, Green Budget Germany, ted carbon dioxide. Wednesday, 9 December 2009] A new Energy strategy will be introduced in Austria in 2010 French President Nicolas Sarkozy has argued and eco tax could be one part of it. At least the tax is necessary to combat climate change Austrian Finance Minister Reinhold Mitter- and reduce the country's dependence on oil. lehner sees eco tax as one good option. In the Observers say the council's ruling is a severe following years Austria will have to buy CO 2 blow to both Sarkozy's environmental plan certificates because it cannot keep its emis- and as France's budget for 2010. The govern- sions under Kyoto limits. The certificates are ment now has to find a way to come up with getting more and more expensive as many about 4.1 billion euros in revenue that was states have to buy them. According to press expected to be generated the tax. sources Austria must pay more than 1 billion euros for the certificates by the end of 2013 http://www.dw-world.de/dw/article/0,,5069767,00.html which is the monitoring year. The research institute Österreichisches Institut Taxes on Unhealthy Food – Denmark für Wirtschaftsforschung (Wifo) calculated Takes Action against “Muffin Tops” the prices and revenues in case of an EU-wide [Berliner Zeitung article and comment and CO 2 tax. Were there a 30-euro-per-tonne-tax denmark.de, translated and compiled by Saija on fuels and 10 euros on heating fuels the Kononen, Friday 11 December 2009] Too fat Austrian state would get 1,5 billion revenues kids, too many overweight adults, too much per year. Was a third given back to energy in- cholesterol in blood. Also the Danes are more tensive industries, the tax would still bring 1 and more suffering from „wealth fatness“. billion euro to the Treasury.

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With their average 76 kilograms the Danes abled through intensive mass animal farming are not only the heaviest EU citizens but with – such taxation would be a real blessing.” gaining 1,7 kilos in the three past years they http://www.denmark.dk/en/servicemenu/News/Busines also are the ones most gaining weight in sNews/SweetTax.htm Europe. The number of super heavyweights has doubled from 5 to 10 % in 20 years, and http://www.berlinonline.de/berliner- almost every second Dane is too fat. zei- tung/archiv/.bin/dump.fcgi/2009/1105/politik/0052/ind Now the Government wants to get rid of the ex.html “muffin tops” by fiscal means. A 25 crone http://www.berlinonline.de/berliner- (3,30 €) tax per kilo of saturated fat should zei- give “a stimulus for better eating habits” and tung/archiv/.bin/dump.fcgi/2009/1110/meinung/0117/i therefore “make the population healthier”, ndex.html stand in the proposal sent to the parliament in Copenhagen. […] The food industry does not want to digest this 3. GREEN BUDGET REFORM ON course of action. “It will disadvantage the sec- EU-LEVEL tor more than it benefits the health”. Taxes on unhealthy food and (non-alcohol) beverages is more of an exemption in the EU. Only five Carbon Credit fraud causes more other member countries have taxes on soda than 5 billion euros damage and Denmark has the highest rate at 0,15 euro for European Taxpayer per litre, with the Netherlands in second place with a tax equivalent to 0,05 euro per litre. [Europol, Wednesday 09 December 2009] Denmark is also the only EU country that The European Union (EU) Emission Trading taxes candy and chocolate and the proposed System (ETS) has been the victim of fraudu- saturated will be the first of its kind in lent traders in the past 18 months. This re- Europe. Food industry branch director of sulted in losses of approximately 5 billion eu- Confederatin of Danish Industry, Ole Linnet ros for several national tax revenues. It is es- Juel, is worried about the effect the tax will timated that in some countries, up to 90% of have on Danish retailers from next year. ‘The the whole market volume was caused by argument to introduce the new taxes is based fraudulent activities. on health, but one could wonder if it will have Indications of suspicious trading activities the desired effect when the price difference on were noted in late 2008, when several market candy and soda in Denmark, Germany and platforms saw an unprecedented increase in Sweden will be even greater,’ Juel told Busi- the trade volume of European Unit Allow- ness.dk. Juel believes more shoppers will ances (EUAs). Market volume peaked in May head across the borders to up on pur- 2009, with several hundred million EUAs chases, reducing the competitiveness of Dan- traded in e.g. in France and Denmark. At that ish products. time the market price of 1 EUA, which equals 1 ton of carbon dioxide, was around EUR Taxes on Ecologically harmful Food? 12,5. One reader of Berliner Zeitung made an inter- esting suggestion. This is what he wrote: “If a As an immediate measure to prevent further fat tax is possible in Denmark we should have losses France, the Netherlands, the UK and a meat tax here [in Germany]. If you think most recently Spain, have all changed their about the harm the frenzied production of taxation rules on these transactions. After cheap meat causes for the environment – en- these measures were taken, the market vol-

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ume in the aforementioned countries dropped Climex (Amsterdam, the Netherlands) and by up to 90 percent. BlueNext (Paris, France) and various other market platforms such as SENDECO2, Italian With the support of Belgium, Denmark, Power Exchange GME and most recently France, the Netherlands, Spain and the United Greenmarket, set up by Deutsche Bank at the Kingdom Europol has set up a specific project Munich exchange. More than 2 billion EUAs to collect and analyse information in order to have been allocated to 12.000 emitting facili- identify and disrupt the organised criminal ties in the 27 MS. The EU carbon market is structures behind these fraud schemes. There estimated to be worth about €90 billion a are reasons to believe that fraudsters might year! soon migrate towards the gas and electricity branches of the energy sector. The Emissions Trading Scheme (EU ETS) was created as a cap-and-trade system for Mr. Wainwright, Director of Europol, says transactions of European Unit Allowances. "These criminal activities endanger the credi- Each transfer of EUAs is recorded in a na- bility of the European Union Emission Trad- tional registry before it is centrally stored in ing System and lead to the loss of significant the Community Independent Transaction Log for governments. Europol is using (CITL) at the EU Commission. its expertise and information capabilities to help target the organised crime groups in- Carbon credit fraud is a variation on the VAT volved". Europol has therefore offered its carousel fraud. The attached graphic shows support to the - DG how carbon credit carousel fraud works: Environment to safeguard the integrity of the http://www.europol.europa.eu/images/pressreleases/car Community Independent Transaction Log." bon_credit_carousel.pdf http://www.europol.europa.eu/index.asp?page=news& Background information news=pr091209.htm Missing trader intra-community fraud (MTIC) is the theft of Value Added Tax (VAT) from a Slovenia wins seat of government by organised crime groups who energy regulators’ agency exploit the way VAT is treated within the member states of the EU. [Europolitics.info, Monday 7 December 2009] Ministers at the Energy Council, on 7 The EU has the objective of limiting global December, signed an intergovernmental warming to 2 degrees Celsius above pre- agreement establishing the new Agency for industrial levels, to reduce climate change and the Cooperation of Energy Regulators meet its obligations under the Kyoto Protocol. (ACER) in Ljubljana, Slovenia. Also in the Each MS has granted its emitting facilities a running had been Slovakia (Bratislava) and certain amount of emission rights by means of Romania (Bucharest). Slovakia, though, fell a National Allocation Plan. These emission behind with 11 votes to Slovenia’s 15 votes. rights can be traded like any other commodity An early decision as to the location of the on the market. The transfer of greenhouse gas agency was seen by many as an important emission allowances is a taxable supply of step in effectively implementing the third leg- services. islative package on theliberalisation of energy markets. In Europe there are 6 trading platforms: Euro- pean Climate Exchange (London, UK), Nor- Under Regulation 713/2009, the ACER will dic Power Exchange (Oslo, Norway), Euro- complement and coordinate the work of na- pean Energy Exchange (Leipzig, Germany), tional regulatory authorities (NRAs). ACER Energy Exchange Austria (Graz, Austria), also oversees the creation of EU electricity

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and gas network rules. ACER can also, under through knowledge; empowering people in certain conditions, take binding individual de- inclusive societies; and creating a competi- cisions on terms and conditions for access and tive, connected and greener economy. The operational security for cross-border infra- deadline for responses to the consultation is structure. The agency, which is being created 15 January 2010. The new Commission will out of the European Regulators’ Group for then make a detailed proposal to the Spring Electricity and Gas (ERGEG), also continues European Council. to exercise an advisory role to EU institutions. Other tasks include monitoring energy mar- Commission President José Manuel Barroso kets. said: "EU 2020 means the EU working to- gether over the next decade to overcome some The European Commission notes that the set- of the toughest economic challenges that ting up of the new agency is to be followed by Europe has ever faced. A smart economy and the selection of buildings in the host country a wise society based on strong European val- and recruitment of staff. The first director of ues go together. Growth, sustainable public ACER is expected to be appointed in the first finances, tackling climate change, social in- half of 2010, noted the Commission. clusion, a strengthened industrial base and a vibrant services sector are not alternatives. ACER should be fully operational from 3 They reinforce each other. Europe reduced March 2011. This is also the date when the unemployment from 12% to 7% in the decade other elements in the third energy liberalisa- to 2008. We now need new sources of growth tion package become applicable, such as to replace the jobs lost in the crisis. We have Regulations 714/2009 on electricity and set out in this paper the keys that can unlock 715/2009 on gas. Directives 2009/72/EC on Europe's potential. At the same time, we can electricity and 2009/73/EC on gas will also increase our influence in the world and on have to be transposed by member states by globalisation by showing our partners that the that date. social market economy is the most efficient http://europolitics.info/slovenia-wins-seat-of-energy- and the most equitable. We want stakeholders' regulators-agency-art256919-10.html views on our EU 2020 Strategy before pre- senting our proposals to the Spring European Commission launches consultation on Council." EU 2020: a new strategy to make the EU The Commission believes EU 2020 should a smarter, greener social market focus on the following areas and is seeking [EU Commission Press Release, Tuesday 24 views on how best to deliver this. November 2009] The Commission today is- Creating value by basing growth on knowledge sued a public consultation document on giv- ing the EU economy a brighter future through Education in Europe must improve, from pre- the EU 2020 Strategy. EU 2020 aims to de- school to higher education, to increase pro- liver greener and socially inclusive growth, as ductivity, support vulnerable groups and help outlined by President Barroso in his Political fight inequality and poverty Guidelines. The new Strategy will build on the achievements of the Lisbon Strategy, The framework conditions for innovation and while learning its lessons. The consultation creativity can still be much improved in paper sets out a vision for how EU 2020 will Europe, for example by modernising the EU's focus on entrenching recovery from the crisis, intellectual property rights system. Access to helping to prevent a similar one in future and credit should be boosted, including through on three thematic objectives: creating value pooled public and private sources of growth capital.

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The EU needs a European Digital Agenda to trading, tax reform, subsidies and loans, pub- deliver a real online single market, so con- lic investment and procurement and targeting sumers can benefit from competitive prices of research and innovation budgets. offered in other Member States and SMEs can break into larger markets. Internet access and Europe needs smarter transport infrastructures skills are becoming necessary for full partici- and an EU wide 'smart grid' for energy, as pation in daily life. Achieving "digital inclu- well as 100% broadband coverage as soon as sion" is a key part of overall social inclusion. possible. The EU and Member States should work together to make the right strategic in- Empowering people in inclusive societies vestments to make two-thirds of electricity generation both low carbon and more secure The crisis has "changed the game". Many pre- by the early 2020s. crisis jobs have been destroyed and will not return. Manufacturing will remain critical to the EU's future economic success. But Europe needs a Europe cannot prosper unless workers have new industrial policy emphasising innovation the skills to contribute to and benefit from a capacity, new technologies, skills, fostering knowledge-based economy. Supply and de- entrepreneurship and "internationalising" mand need to be better matched, through la- SMEs. Excess capacity in some sectors must bour mobility across and within borders and be tackled. Those adversely affected will need through better anticipation of future skills to be supported. needs. Governance - making EU 2020 work The Commission is determined to advance the flexicurity agenda and to ensure it is better The Commission proposes that the European understood in terms not only of flexibility Council should steer EU 2020, making the from employees but also of employers and key decisions and setting the objectives based governments shouldering more responsibility on Commission proposals. The Commission for investing in and protecting people. Those wants the to play a sig- who cannot find a job should be supported nificantly greater role. National parliaments both financially and through individualised will also be invited to take a strong interest help to regain access to the labour market. and assume ownership.

Creating a competitive, connected and greener The consultation paper proposes that the 2010 economy Spring European Council conclusions under- pin the so-called 'integrated guidelines', con- The future will see high energy prices, carbon firming the policy priorities which should be constraints and greater competition for re- pursued by the EU and Member States in sources and markets. All of these are risks but partnership. The new guidelines would re- also present opportunities to create a "new" place those in force under the Lisbon Strategy EU 2020 economy with a strong global com- since 2005. petitive advantage. New greener technologies can stimulate growth, create new jobs and For each of these objectives, Member States services and help the EU meet climate change would be invited to set national objectives for goals. On the other hand, failure to adapt to five years corresponding to their different the 21 st century would see Europe decline. situations and their starting points. The Com- mission and the European Council will moni- The policies at EU and national level to pro- tor progress every year in Member States and mote eco-innovation and energy-efficient at EU level. products and systems should include emission

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The deadline for responses to the consultation Think-tank leader: EU’s is 15 January. Responses can be e-mailed to 2020 strategy ‘too short-termist’ [email protected] . [Summarised by Saija Kononen, from EurAc- The full consultation document will be made tiv Article, published on Tuesday 15 Decem- available via: ber 2009] The EU's 2020 strategy to build a http://ec.europa.eu/commission_barroso/president/inde sustainable future beyond the current eco- x_en.htm and http://ec.europa.eu/eu2020 nomic crisis is too short-termist and fails to address the fundamental problems of the cur- EU Environment Council conclusions rent growth model, Philippe Herzog, founder on eco-efficient economy challenge of the Confrontations Europe think-tank, told EurActiv in an interview. ΒΒΒarroso to reform Lisbon strategy [EEB Press Release, Wednesday 21 October Philippe Herzog is a former French MEP and 2009] The European Environmental Bureau the founder of the think-tank Confrontations welcomed the conclusions of the Council of Europe, which in December 2009 hosted a EU Environment Ministers on moving to- two-day conference in Brussels exploring 'in- wards eco-efficient economies today. vestment in human capital and long-term fi- nancing'. These conclusions were the result of several debates the Swedish Presidency organised The idea of sustainable recovery emerged in amongst EU Ministers for Environment, En- many of the presentations at the Confronta- ergy Economic Affairs and Finance. The main tions Europe conference. What different mes- target of the discussion was the new EU Lis- sages did you take from the conference on this bon strategy post-2010. theme? What will this look like in the years to come? John Hontelez, Secretary-General EEB, said: The EU is not quite ready for a sustainable re- “These Ministers have given a clear signal covery, because this year has been devoted to that the new Lisbon Strategy has to be a green waiting for the Irish referendum, the new one, focusing on absolute decoupling of eco- Commission is not in place – we have missed nomic growth from environmental degrada- a year, effectively. tion. It is now for President Barroso to pick up the challenge and propose the necessary I hope we'll be speedy in 2010, because national and EU wide measures to make it there's much to be done. The notion of sus- happen”. tainable recovery refers first and foremost to the fact that we have to build a new type of “The priority is to promote an EU wide coor- growth. In the past, growth was linked to fi- dinated effort to send the right market signals nancial bubbles and the immoderate use of to producers and consumers, through envi- leverage – it was very short-termist. ronmental tax reform, elimination of envi- ronmentally perverse subsidies and green In the future, we will need a growth model public procurement,” added Mr Hontelez. based on long-term investment, be it in educa- tion, infrastructure, or the so-called 'green Read: Environmental Council Conclusions: economy', which will entail deep changes in Towards Sustainability: Eco-Efficient Econ- the way we produce and consume. omy in the context of the post-2010 Lisbon Agenda and the EU Sustainable Development Have the measures outlined by the EU so far Strategy: been the right ones – for example, the EU http://www.consilium.europa.eu/uedocs/cms_Data/doc 2020 strategy? s/pressdata/en/envir/110627.pdf

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I think the EU acted properly in 2008, other- 'industrial policy', and at the moment, the EU wise we'd be in a much deeper recession to- is not yet bringing together the different peo- day, but it was short-termist and Keynesian ple required to devote themselves to the prob- economics of the simplest type – i.e. sustain- lems. If you take the car industry, everyone ing the global demand. knows that the restructurings will be very dif- ficult, but you don't see any public organisa- Now the challenge is to change our strategy tion pushing for these changes, and they cer- for growth, and this will require a fundamen- tainly won't be implemented by the carmakers tal change from the current Lisbon Strategy. I alone. At the moment, the automakers are en- think the way the Commission is preparing gaged in consolidation, building new alli- the new strategy is very problematic. First of ances, certainly not preparing for the new all, the public consultation period is far too types of investment they need. So we are los- short, it's almost non-sensical to try to consult ing time. people over the holiday period, between the end of November and early January. It should To read the whole interview, go to have started much earlier. http://www.euractiv.com/en/socialeurope/think-tank- leader-eu-2020-strategy-short-termist/article-188363# Secondly, I'm not very satisfied with the 'EU 2020' ideas. The markets are patchy, there are new bubbles arising, but no renewal of in- REEN UDGET EFORM vestment. So the next year will be very sensi- 4. G B R tive, and we would have liked a more long- WORLDWIDE term view as regards investment. Also, we expect the short-term agenda - i.e. 2010 to 2014-15 – to be a dramatic period, with ques- Japan’s Democrats opened the Policy tions like industrial restructuring and the so- Window for Market Based Instruments? cial problems that will arise as a result, and [Park Seung-Joon and Sven Rudolph, we feel there should have been much more Wednesday 28 October 2009] As the result of focus on this. the general election on August 30, 2009, Ja- What about 'green tech' perspective? pan’s long-time ruling party, the Liberal De- mocratic Party (LDP), went into opposition. When you speak of the 'green economy', of In spite of the loyal attitude of the Japanese course it's one of the main drivers of the fu- society toward the Kyoto Protocol, the im- ture, but this needs to be built: at the moment plementation of effective market based in- we don't have the skills, the infrastructure, struments (MBI) has been in a stalemate. The and this is what we need. For instance, en- carbon tax proposal of the Ministry of Envi- ergy, transport, buildings (not only private ronment has failed the last 5 years, and estab- lodgings but public buildings): these different lished emissions trading schemes, Japan's areas require new skills and therefore invest- Voluntary Emissions Trading Scheme (J- ment funds devoted to their creation. VETS) since 2005 and Integrated Domestic I think this will be done in the future, but it's Market (IDM) since 2008, have been non- taking far too long. obligatory and without overall absolute caps. If you take as an example the restructuring of However, the new government may break the the car industry, it's not merely the develop- ice. The now ruling coalition of the Democ- ment of clean or electric cars – you need in- ratic Party (DPJ), Social Democratic Party frastructure, new methods of electricity deliv- (SDP) and People’s New Party (PNP) has ery, and so on. I call these types of devices been inaugurated on October 16, 2009, hold- ing as much as two-thirds of the Lower House

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seats. The new prime minister Yukio Hato- 10% share of renewable energy in the primary yama announced at the U.N. Climate Change energy supply in 2020 compared to 2.2% in Conference held on September 22, 2009, in 2005. New York that Japan will reduce its GHG emissions by 25% from 1990 level by 2020 The announced climate policy of the Hato- (30% under 2005 level; c.f. the former gov- yama administration is welcomed by global ernment: -8% from 1990 level, -15% from leaders such as Ban Ki-Moon or Yves de 2005 level). It seems even more ambitious Boer. Domestically, the opinion poll showed than EU’s target. However, this promise is that 74% of Japan’s citizens support DPJ’s said to be conditioned by the cooperation of climate policy (Yomiuri Shinbun, September major emitting countries, and the use of for- 17, 2009). Industrial Groups such as the Kei- eign credits will be allowed. The Cabinet danren, the Federation of Electric Power launched an inter-ministerial working group Companies and the Japan Automobile Manu- consisting of the National Institute for Envi- facturers Association showed an opposing po- ronmental Studies and the Institute of Energy sition. But interestingly, there are some sup- Economics in order to analyze the (positive) porting business leaders such as Masamitsu economic effects of this target-achievement. Sakurai, the Chairman of the Association of Corporate Executives (Keizai Doyukai). The policy instruments that are considered are a cap-and-trade system, Feed-in for re- While the climate and energy policy process newable energy, and an environmental tax. in the old regime was dominated by the iron Ozawa, the new Environmental Minister said triangle of bureaucrats, industry and LDP, the that he wants to introduce cap-and-trade in new government declared that it will establish 2011 and the eco-tax within 4 years. Accord- options for initiatives by elected politicians. ing to the older Environmental Vision of DPJ In case of success, this will be the most re- (of December 24, 2008), the revenue of the markable change in post-war Japanese poli- eco-tax will be spent for development and dif- tics. As long as DPJ stands firm on its pro- fusion of renewable energy and energy saving active climate policy, there will also be a bet- technologies. Still, concrete proposals are yet ter chance for market based instruments in Ja- to be published, and it is still open if DPJ’s pan. proposals will pass Japan’s political decision making process. The most contradictory parts Japan industry unites against carbon tax of promised energy policies are the abolition [Reuters, Monday 7 December 2009] Japan of the provisional for automobile fu- should not consider a carbon tax as it would els (25.1 yen of 53.8 yen for gasoline tax, damage the economy which is already among 17.1 yen of 32.1 yen for diesel tax; 1 Euro = the world's most energy efficient, its top in- 137.5 yen) and for vehicles, and the plan to dustries said in a rare combined stand on the make highways free of charge again. opening day of the Copenhagen climate con- The policy for renewable energies under the ference. old government has been based mainly on the The nine industry groupings also called for Renewable Portfolio Standard (RPS) system, Tokyo to keep unchanged its commitment to a but as the competitiveness of the domestic so- 25 percent cut in greenhouse gas emissions by lar-power industry has been endangered under 2020 from 1990 levels only if all major emit- this scheme, a feed-in tariff system (FIT) only ters agree with a comparable and effective for photovoltaic has been introduced before deal to fight global warming. the change of government. The DPJ will re- place the RPS by FIT for all major renewable energies such as wind or biomass, aiming at a

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“We joined hands quickly and came up with Indonesia plans carbon tax, this request because visibility has been low in geothermal push regard to the issue of an environment tax and the government's strategic position for (Co- [Tom Arup, Tuesday 8 December 2009] As penhagen),” said Kosei Shindo, head of the Australia battles over an emissions trading environment and energy policy committee at scheme, Indonesia is set to release its draft the Japan Iron and Steel Federation. climate change policy, which would establish a carbon tax, set up geothermal energy pro- The other eight groups represented companies jects and protect forests. in oil, cement, paper, chemical, gas, electric power, auto manufacturing and electronics The potential carbon tax, part of Indonesia's and information technology sectors. ''green paper'' on climate change, would apply to the combustion of fossil fuels and start at Later this week, the government's tax panel $9 a tonne of carbon dioxide, rising 5 per cent will compile a list of annual tax revision pro- in real terms per year until 2020. posals for the next fiscal year that starts on April 1, in a move to make up for a steep fall The tax could be coupled with cuts to subsi- in tax revenues caused by the faltering econ- dies for coal and oil-generated power, in an omy. attempt to promote clean energy in the one of the world's fastest-growing economies. If introduced, an environmental tax would be the first new tax since April 1989, when Japan The climate change policy paper, commis- introduced a . The nine sioned by the Indonesian Finance Ministry, is groups said that they were opposing a an im- set to be formally released at the Copenhagen plementation of a new tax on fossil fuels, with talks. the extra payments estimated at about 2 tril- The estimates that Indonesia is lion yen ($22 billion) to be handed over to the world's third-largest emitter of greenhouse manufacturers and consumers. gases, mainly the result of deforestation and The government has neither studied nor ex- burning of peatlands. plained thoroughly enough why such a carbon Indonesia's climate change strategy proposes tax is needed, how effective and fair it is and cutting emissions in three ways - developing how the payments are to be used, they said. geothermal power, driving energy efficiency "Taxation is one of the foundations of democ- and reducing deforestation. racy. We're calling for comprehensive discus- ANU climate change institute deputy director sions," said Shindo, also Nippon Steel Corp's Dr Frank Jotzo said Indonesia would rely Executive Vice President. heavily on selling carbon credits to developed countries to stop deforestation. "We believe CO 2 cuts are primarily achieved by innovation in technology," he said, adding Dr Jotzo, who helped prepare the policy paper an environment tax or other policy steps for Indonesia, said the gained from would be supplemental. selling offsets would be passed on to regional http://uk.reuters.com/article/idUKTOE5B609U200912 governments for climate change mitigation 07?pageNumber=2&virtualBrandChannel=0 programs. Indonesia will also develop a detailed plan to tap the country's huge geothermal potential - which represents 40 per cent of the world's hot-rock resources. The geothermal strategy is

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aimed at partially offsetting a 7 per cent in- Last year's average temperature in China was crease in energy demand every year. 9.6 degrees Celsius, the seventh-warmest year since 1951. The plan includes a geothermal tariff, in which the Government subsidises the purcha- The reports said a carbon tax should be at the se of clean energy by electricity retailers. heart of any strategy to cut emissions and in- crease energy efficiency. Dr Jotzo said geothermal energy had obvious potential in Indonesia, but just 3 per cent of A carbon tax could be imposed on both the the resource had been tapped. production and consumption process, with rates, and would have substantial The green paper was commissioned by Indo- short- and long-term effects, the reports said. nesian Finance Minister Dr Sri Mulyani In- drawati while in Australia last year, and was "In (the) short run, it discourages the utiliza- written with the help of AusAID and the Aus- tion of end-use energy in both production and tralian Treasury. final demand. In the long run, it gives firms incentives to invest on technology innovation Indonesian President Susilo Bambang Yud- and diffusion of no-carbon or low carbon hoyono has committed the country to an technologies, and further reduce carbon diox- emissions reduction of 26 per cent on busi- ide by choosing a cleaner developing path," ness-as-usual levels by 2020, rising to 41 per the report stated. cent if the international community commits to climate change funding for developing The reports said the advantages of a carbon countries. tax include that it would be easier for the gov- ernment to implement than creating a brand- http://www.smh.com.au/national/indonesia-plans- carbon-tax-geothermal-push-20091207-kfcl.html new carbon emissions market; it would be a major source of ; it would Green Paper: be more transparent and understanddable, and hence likely to enjoy broader public support; http://www.fiskal.depkeu.go.id/webbkf/siaranpers/siara npdf%5CGreen%20Paper%20Final.pdf and it could be implemented with fewer op- portunities for interference by various special interest groups. China: Economists: tax carbon to cut emissions Zhang Jianjun, director of the Department of Sustainable Development and Climate [Chen Xiaomin, Global Times, Wednesday 9 Change at PricewaterhouseCoopers Consul- December 2009] The best market instrument ting China, echoed the sentiment. China can use to cut its greenhouse gas emis- sions in the near future is a carbon tax, ac- "A carbon tax is the fairest way to get all en- cording to two reports issued by the Chinese terprises involved in this emission reduction Economists 50 forum. mission," Zhang said, adding that the tax might impact the already low profit margins The reports said the impact of global warming of high emitters like steel mills. has exceeded previous predictions. If China's emissions peak in 2025, the country will have Fan Gang, an adviser to China's , to reduce them 35 percent in every year after said a carbon tax would facilitate an adjust- that to help keep global warming below 2 de- ment of China's economic structure, though it grees Celsius by 2050. could be costly to enterprises in the short term.

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"The country can lower other (requirements) poorest consumers are not made more vulner- on enterprises," said Fan, citing European na- able following a phase-out of subsidies. tions that limit the social security payments businesses must make. “It is clearly invidious for governments to fi- nance carbon reduction policies whilst simul- The reports also said that while levying a car- taneously increasing fossil fuel consumption bon tax, China could also use a cap-and-trade through subsidies,” says the letter. “The cur- system, which could become the more domi- rent annual fossil fuel subsidy bill of hundreds nant carbon pricing instrument in the future. of billions of dollars would be better spent on health, education, renewable energy or other China vowed to cut energy consumption per actions that would accelerate the transition to unit of GDP production by 20 percent dur-ing a green economy.” its current 11th Five-Year Plan period (2006- 2010) and declared in November that it plans The Green Economy Coalition says an end to to cut carbon intensity by 40-45 percent by subsidies would help stabilize the world cli- 2020 from 2005 levels. mate by reducing global carbon dioxide emis- sions by 10%, or the equivalent of Russia and Report: Japan’s combined total. http://sei- intern- “These subsidies are a massive diversion of tional.org/?p=publications&task=view&pid=1325 public funds that could be better spend in other ways,” says Mark Halle of IISD. “Sub- sidies create false impressions about the rela- G20 wastes hundreds of billions tive cost of lower-carbon energy alternatives on perverse fossil fuel subsidies, and this is bringing us closer to irreversible says global coalition climate change.” [Ecologic Institute Press Release, November In September, G20 leaders agreed in Pitts- 2009] G20 governments should end their per- burgh in September to phase of these subsi- verse fossil-fuel subsidies, which contribute dies over the medium term. The Green Econ- directly to climate change, cost hundreds of omy Coalition welcomes that move but calls billions of dollars each year, and create artifi- for greater urgency in implementing the cial barriers to sustainable development, urges phase-out and outlines ways to ensure that a to the Green Economy Coalition. Ecologic In- reform of subsidies will protect the welfare of stitute is a coalition member. the poorest.

Green Economy Coalition members including http://ecologic.eu/3008 the International Institute for Environment and Development (IIED), Consumers Interna- tional, WWF International, UNEP, IUCN, and the International Institute for Sustainable De- 5. COPENHAGEN SPECIAL velopment (IISD) are urging them to phase out these subsidies as soon as possible. Turn climate action into Apollo mission, The Green Economy Coalition has written to says leading MEP the G20 finance ministers ahead of their meet- [EurActive, Monday 14 December 2009] The ing this weekend in Scotland (6-7 November United States succeeded in bringing people to 2009) to outline how and why to remove the moon: a dream that nobody thought would these harmful subsidies. The coalition stresses be realised. Perhaps we should think of cli- the need for governments to ensure that the mate protection as the new Apollo pro-

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gramme, the vice-chair of the European Par- Describing the UN climate conference in Co- liament's delegation in Copenhagen, Karl- penhagen as an historic moment, Florenz Heinz Florenz, told EurActiv in an interview. called for an historic decision to be taken. Cit- ing as an example the Bretton Woods agree- The centre-right German MEP was blunt in ment, which set the system of monetary man- saying that rather than the climate, leaders agement, and the Marshall Plan that rebuilt should focus on the economy. Europe after the war, the centre-right MEP "We will have to overcome the inertia of past called for action. practices, we need to make sure that coming "I often get the impression that we do not see laws are not the 'paper tigers' that we had in the bottom line on the debate and lose our- the past," Florenz argued, stressing that to- selves in small details and fussy debates," he day's investments will form the basis of to- said. morrow's growth. "It is about building a new economic model," he said. Karl-Heinz Florenz was speaking to Daniela Vincenti-Mitchener. Full interview: "The economy is there," stressed the second- in-command of the European Parliament's http://www.euractiv.com/en/climate-change/mep- delegation to the Copenhagen talks. "It tells climate-action-economy/article-188187 us that the immense costs of tackling climate change will be matched by the enormous Obama’s Climate Policy: on Copenha- growth potential of the revolution in sustain- gen, Emission Target and able development, the revolution in energy ef- What has happened so far ficiency, in energy production, in consump- tion and transport," he said. [Summarised by Saija Kononen from White House Press Release, published on Wednes- Florenz indeed considers delegates should en- day 25 November 2009] The White House gage in talks more as they would do in trade announced today that President Obama will negotiations. "The global market in low- travel to Copenhagen on Dec. 9 to participate carbon goods and services is already worth in the Climate Change Con- five trillion dollars and is expected to increase ference, where he is eager to work with the in- by another 50% over the next decade," he ternational community to drive progress to- pointed out. ward a comprehensive and operational Co- penhagen accord. The President has worked "Sustainability is key. It is not only about cli- steadily on behalf of a positive outcome in mate protection, but about the future of our Copenhagen throughout the year. Based on industry. It is about jobs," the German MEP the President’s work on climate change over said, before noting that industrialised coun- the past 10 months – in the Major Economies tries cannot curb emissions on their own: they Forum, the G20, bilateral discussions and need partners. multilateral consultations – and based on pro- "Financing action on climate change is not gress made in recent, constructive discussions only the responsibility of the developed with China and India’s Leaders, the President world," argued Florenz, who stressed that fi- believes it is possible to reach a meaningful nancing climate protection cannot be part of agreement in Copenhagen. The President’s official development aid. decision to go is a sign of his continuing commitment and leadership to find a global "We cannot allow that our fight against cli- solution to the global threat of climate mate change to divert money from the poor- change, and to lay the foundation for a new, est," he underlined.

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sustainable and prosperous clean energy fu- energy economy. Topics will range from en- ture. ergy efficiency investments and global com- mitments to renewables policy and clean en- The White House also announced that, in the ergy jobs. context of an overall deal in Copenhagen that includes robust mitigation contributions from In addition to passage of the American Clean China and the other emerging economies, the Energy and Security Act in the House of Rep- President is prepared to put on the table a U.S. resentatives this summer, Administration offi- emissions reduction target in the range of cials will highlight an impressive resume of 17% below 2005 levels in 2020 and ulti- American action and accomplishments over mately in line with final U.S. energy and cli- the last 10 months, including: mate legislation. In light of the President’s goal to reduce emissions 83% by 2050, the Domestic Leadership expected pathway set forth in this pending • Recovery Act: The U.S. is investing legislation would entail a 30% reduction be- more than $80 billion in clean energy low 2005 levels in 2025 and a 42% reduction through its Recovery Act – including below 2005 in 2030. This provisional target is the largest-ever investment in renewable in line with current legislation in both cham- energy, which will double our genera- bers of Congress and demonstrates a signifi- tion of clean renewable energy like cant contribution to a problem that the U.S. wind and solar in three years. has neglected for too long. With less than two • Efficiency Standard for Automobiles: weeks to go until the beginning of the Copen- President Obama announced the first hagen conference, it is essential that the coun- ever joint fuel economy/greenhouse gas tries of the world, led by the major econo- emissions standards for cars and trucks mies, do what it takes to produce a strong, op- in May. The new standards are pro- erational agreement that will both launch us jected to save 1.8 billion barrels of oil on a concerted effort to combat climate over the life of the program with a fuel change and serve as a stepping stone to a le- economy gain averaging more than 5 gally binding treaty. The President is working percent per year and a reduction of ap- closely with Congress to pass energy and cli- proximately 900 million metric tons in mate legislation as soon as possible. greenhouse gas emissions. Underscoring President Obama’s commitment • Advancing Comprehensive Energy Leg- to American leadership on clean energy and islation: Passing comprehensive energy combating climate change, the White House and climate legislation is a top priority also announced today that a host of Cabinet for the Administration and significant secretaries and other top officials from across progress has been made. In June, The the Administration will travel to Copenhagen U.S. House of Representatives passed for the conference. the American Clean Energy and Secu- rity Act that will promote clean energy For the first time, the U.S. delegation will investments and lower U.S. greenhouse have a U.S. Center at the conference, provid- gas emissions more than 80 percent by ing a unique and interactive forum to share 2050. The Senate continues to advance our story with the world. In addition to work- their efforts to pass comprehensive leg- ing with other countries to advance American islation and move the U.S. closer to a interests, U.S. delegates will keynote a series system of clean energy incentives that of events highlighting actions by the Obama create new energy jobs, reduce our de- Administration to provide domestic and pendence on oil, and cut pollution. global leadership in the transition to a clean

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• Appliance Efficiency Standards: The • Eliminating Fossil Fuel Subsidies: The Obama Administration has forged more President spearheaded an agreement at stringent energy efficiency standards for the Pittsburgh G20 summit for all G20 commercial and residential appliances, nations to phase out their fossil fuel including microwaves, kitchen ranges, subsidies over the medium term and to dishwashers, lightbulbs and other com- work with other countries to do the mon appliances. This common sense same. Asia-Pacific Economic Coopera- approach makes improved efficiency a tion nations followed the G20 lead at manufacturing requirement for the eve- their summit in Singapore, expanding ryday appliances used in practically the number of countries committing to every home and business, resulting in a these subsidies. According to the Inter- significant reduction in energy use. Al- national Energy Agency, this measure together, about two dozen new energy alone could reduce global greenhouse efficiency standards will be completed gas emissions 10 percent or more by in the next few years. 2050. • Offshore Energy Development: Within • Bilateral Energy and Climate Partner- the Administration’s first 100 days, a ships: The U.S. is accelerating its col- new regulatory framework was estab- laboration with China, India, Mexico, lished to facilitate the development of Canada and other key international alternative energy projects in an eco- partners to combat climate change, co- nomic and environmentally sound man- ordinate clean energy research and de- ner that allows us to tap into the vast velopment, and support the international energy potential of the Outer Continen- climate talks. tal Shelf (OCS). The National Renew- • Energy and Climate Partnership for the able Energy Lab estimates that devel- Americas: President Obama proposed a opment of wind energy alone on the partnership with our neighbors in the OCS may provide an additional 1,900 western hemisphere to advance energy gigawatts of clean energy to the U.S. security and combat climate change. An • Emissions Inventory Rule: For the first early product of this cooperation is time, the U.S. will catalogue greenhouse Chile’s Renewable Energy Center, gas emissions from large emission which receives technical support from sources – an important initial step to- the U.S. Department of Energy. ward measurable and transparent reduc- • Phasing Down HFCs (Hydrofluorocar- tions. bons): The U.S. joined Canada and International Leadership Mexico in proposing to phase-down HFC emissions, a very potent green- • The Major Economies Forum (MEF): house gas, in developed and developing President Obama launched the MEF in countries under the Montreal Protocol. March 2009, creating a new dialogue This represents a down payment of among developed and emerging econo- about 10% of the emission reductions mies to combat climate change and necessary to cut global greenhouse gas promote clean energy. At the July emissions to half their current levels by L’Aquila summit, MEF Leaders an- 2050. nounced important new agreements to support the UN climate talks and http://www.whitehouse.gov/the-press-office/president- attend-copenhagen-climate-talks launched a new Global Partnership to promote clean energy technologies.

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Obama’s speech in Copenhagen: "Since the funding is available now, it can http://www.spiegel.de/wissenschaft/natur/0,1518,6679 have an immediate impact." Unlike other pro- 66,00.html posals, the plan could be implemented within existing financial structures. SDRs, issued by Ahead of EU summit, Soros unveils cli- the International Monetary Fund, essentially mate finance plan constitute additional foreign exchange. [EurActive. Friday 11 December 2009] While In response to the global financial crisis, in EU leaders are expected to agree on immedi- September 2009 the IMF issued $283 billion ate action to provide financial support for de- in SDRs, with more than $150 billion going to veloping countries in Brussels today (11 De- the 15 biggest developed economies. This sits cember), in Copenhagen billionaire investor largely untouched in their reserve accounts, has unveiled a plan to provide leaving a surplus that could be donated to the up to 150 billion dollars for poor countries to green fund, according to Soros' plan. access clean technologies. ActionAid Climate Justice Co-ordinator Tom The plan was presented as negotiations inten- Sharman said Soros' proposals were exciting. sify at the UN summit in Copenhagen on fi- nancial aid and short-term fiscal arrangement. "The US$200 billion a year that developing countries need to tackle climate change effec- Developing countries are calling for signifi- tively will not just fall out of the sky. That's cant transfer of money and technology from why innovative ways to find the cash are so the industrialised world to Africa, Asia and important," he said. . Rich nations have proposed 10 billion a year from 2010 to 2012 to help However, there is a major stumbling block in developing countries. the way of Soros' plan: getting approval to re-

The $10 billion is "not sufficient" and the gap Fast Start Fund for Developing Coutries between what is being offered and what is needed could cause the Copenhagen climate European Union leaders agreed in Decem- conference to fail, Soros said yesterday (10 ber to provide at least 7.2 billion euros November). (10.6 billion dollars) to a three-year global fund aimed at helping poor nations deal Systems exist, all is needed is political will with climate change. The "fast-start" money, which is based on voluntary contri- About $100 billion as a one-off injection butions from the bloc's 27 member states, is could be generated, Soros said, noting that all to be made available as of 2010. that is required is political will. Environmental and developmet aid organi- Underpinned by reserves, rich countries sations criticised fund for too small. One could double the funding available to combat problem is that the EU did not promise climate change by donating recently-issued more money, therefore, the fund will be in- (SDRs) to a new cluded in the development budget. green fund. allocate IMF funds, particularly from the This fund would jumpstart investment in low- United States. carbon energy sources, reforestation efforts, rainforest protection, land use reform and ad- The US administration faced an uphill battle aptation programmes. "This is a win-win op- to win approval in Congress for the IMF's portunity for developed and developing coun- $200 billion in new SDRs to deal with the tries to work together," Soros said. global financial crisis, and would likely face

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further hurdles in any effort to change the des- Operational implementation would fall to ex- tination or purpose of those funds. isting multilateral institutions such as national trust funds and a new strategic fund. Other plans try to bridge political divide in Co- http://www.euractiv.com/en/climate-change/ahead-eu- penhagen summit-soros-unveils-climate-finance-plan/article- 188234 On top of Soros' plan, another detailed pro- posal was delivered recently by Project Cata- lyst, a joint initiative between the European Copenhagen or Bust Climate Foundation and the Climate Works The time is now for an international deal Foundation. on climate change The project reckons that $100bn will be [ in Newsweek, September needed by 2020 to finance climate change 2009] In just 11 weeks, the world will con- programmes in developing countries. About vene in Copenhagen, under the auspices of half could come from the growing carbon the United Nations, to forge a new interna- market, which would be worth an estimated tional agreement on climate change. It is a $2 trillion a year by 2020. historic moment: the ultimate test of global cooperation. Yet the negotiations are proceed- Countries could give some of the carbon mar- ing so slowly that a deal is in grave danger. ket allowances to green programmes, with other funds coming from a relatively small fee If we miss this opportunity, there will be no on each transaction. second chance sometime in the future, no later way to undo the catastrophic damage to the Additional funding of $10 to 20 billion would environment we will cause. So when world come from taxes on fuels used in aviation and leaders gather this week, first at the United shipping sectors. The rest - $25-30 billion - Nations in New York and then at the G20 would be provided by loans or grants from summit in Pittsburgh, it is essential that we developed countries, particularly the US, the move toward resolving the issues that still di- EU, Canada, Japan and Australia. vide our nations. As scientists spell out the mounting evidence both of the climate change Last week, US President 's already occurring and of the threat it poses in spokesperson reportedly said that the presi- the future, we cannot allow the negotiations to dent supported a short-term fund for climate run out of time simply for lack of attention. aid and that the United States would pay "its Failure would be unforgivable. fair share". Some argue that, amid demanding economic Project Catalyst considers that fast-start fund- conditions, our resolve to meet environmental ing should be allocated as follows: a third for commitments should weaken, that the costs mitigation excluding forestry, a third for for- are too high. In fact, the opposite is true; a estry and a third for adaptation, 20% of which strong agreement in Copenhagen is essential would go for capacity building. for global economic recovery. For that recov- Another Project Catalyst report argues that a ery depends on the investment that an agree- high-level climate finance board, guided by ment will unleash. The economies that em- and accountable to the UN and with equal de- brace the green revolution earliest will reap veloped and representa- the greatest rewards. tion should be responsible for the integrity of Initially, more-efficient consumption of en- the system. ergy will bring greater overall productivity, as resources once directed to meet fuel bills are

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released for investment. Meanwhile the need ine partnership of the public and private sec- for low-carbon energy production and infra- tors. structure, in both the developed world and the rapidly growing emerging economies, will re- That's why global agreement on a new cli- quire up to $33 trillion of investment by 2030, mate-change regime in Copenhagen this De- according to estimates from the International cember is so important. A strong deal that es- Energy Agency. By 2015, the global envi- tablishes legally binding commitments to re- ronmental sector could be worth $7 trillion duce emissions will provide the confidence and sustain tens of millions of jobs. and certainty needed to underpin low-carbon investment. The U.N. talks are therefore not But perhaps the most important element of only about safeguarding the environment but this low-carbon future is the wave of innova- also about stimulating economic demand and tion that will accompany the decarbonisation investment- drive. Some of the technologies required are fairly mature, such as onshore wind and The U.K. government has set out our propos- household insulation—though even there; als for an agreement that is ambitious, effec- significant improvements are still to be made. tive, and fair. Ambitious in that it must put the But many others will see dramatic improve- world on a path to limiting the average global ments and breakthroughs, both in perform- temperature rise to 2 degrees Celsius; effec- ance and in cost. tive by establishing market mechanisms to re- duce emissions efficiently alongside a strong This is beginning to happen already in areas regime of monitoring and verification; and such as large-scale battery design, stimulated fair in providing help to allow developing by the acceleration of research into electric countries to tackle climate change. In June I vehicles by the automotive industry. It is hap- suggested a working figure of $100 billion per pening in sustainable building technologies, year from public and private sources by 2020. in new lightweight materials, in solar power, in carbon capture and storage, and in various I have been gratified by the response of many lean manufacturing technologies. As innova- countries, both in public and in private. But tions in one area feed into others, the eco- we need to move now toward securing an nomic potential and benefits will ripple out agreement in Copenhagen. I believe it can be across the global economy. done. And if it is necessary to clinch the deal, I will personally go to Copenhagen to achieve So just as the revolution in information tech- it—and will be urging my fellow leaders to do nologies provided a major motor of growth so too. http://www.newsweek.com/id/215699/page/2 over the past 30 years, the transformation to low-carbon technologies will do so over the Brown and Sarkozy Proposing a New next. But it can be sustained only if govern- Tax to Finance Climate Change ments back it—not just on a national scale, but globally. They need to act to create suffi- [Saija Kononen, Tuesday 15 December] On cient economic incentives and to ensure in- Friday, 11 December, days before Copenha- vestor certainty and confidence. gen conference the EU sought chances of a fund helping developing countries to face the This means sending clear and long-term sig- problems of the climate change. In the EU nals about the direction of policy and shape of summit, Prime Minister Gordon Brown and future demand, and market-based implemen- President Nicolas Sarkozy gave out a joint tation methods to enable the private sector to statement. The most quoted part was defi- respond innovatively. This has to be a genu- nitely about the global financial transaction tax, as a new financing mechanism. The

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statement also meant to serve as a positive To this end we will work with developed signal for the developing countries in the run- countries and rainforest nations over the next up to Copenhagen; financial transfers from few days to deliver an equitable and effective rich to poor are one of the most problematic agreement on forest finance and governance. issues in Copenhagen. This is the statement as We will jointly attend a conference of rainfor- it was published on the website of Prime Min- est countries of the Congo basin next week in ister (highlighted by the author). Paris. “We agreed: That long term financial support is needed to assist developing countries meet the costs of To work for an ambitious deal in Copenha- mitigation and adaptation, estimated at around gen, consistent with a maximum global warm- €100 billion, in 2020. ing of two degrees, to which all parties con- tribute, and which enables the EU to reduce We are determined that Copenhagen agrees to its emissions by 30% by 2020. put in place stronger global environmental governance. To enable immediate implementation of the Copenhagen agreement we support the estab- There is much at stake at Copenhagen. We lishment of a ‘fast start’ launch fund for 2010- will be doing all in our power to reach the 12 which achieves $10 billion annually in ambitious and comprehensive global agree- 2012. A large amount of this should go to ad- ment the world needs.” From the Govern- aptation, especially in Africa, small island ment’s website: states and other poor and vulnerable coun- http://www.number10.gov.uk/Page21706 tries. France and the UK will each contribute their fair share among the advanced econo- France, Africa Want to Tax Banks mies - around €400 million euros ($600 mil- to Finance Climate lion dollars) a year. The UK is prepared to go [ENDS Europe DAILY, Wednesday 16 De- further and contribute up to $800 million dol- cember 2009] France and Ethiopia, represent- lars a year in the light of offers from others. ing Africa, have called for a global tax on fi- To ensure predictable and additional finance nancial transactions to help finance climate in the medium term to 2020 and beyond, we mitigation and adaptation measures in poor should make use of innovative financing countries beyond 2012. They also want taxes mechanisms, such as the use of revenues from on sea freight and air transport. a global financial transactions tax and the re- The tax on financial transactions, also known duction of aviation and maritime emissions as the Tobin tax, is one of several proposals and the auctioning of national emissions per- some old, some new in a joint statement made mits. We will work together on this. by France and Ethiopia on Tuesday. The call Rainforest countries need the security of fi- was immediately backed by UK Prime Minis- nance now and for the coming years. We be- ter Gordon Brown. lieve around 20% of early finance should be French president Nicolas Sarkozy, Barack allocated to forest protection. We want the Obama, Angela Merkel and Gordon Brown Copenhagen agreement to agree a reduction in had a joint telephone conversation on Tues- deforestation of 25% by 2015, leading to a day to discuss divisive issues such as climate 50% reduction in 2020 and a halt in 2030. financing. "If we don't have this [Tobin] tax, The developed world should pay for the ma- who is going to pay?" asked Mr Sarkozy at a jority of this, supporting developing coun- press conference in Paris. tries’ own efforts.

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Europe and Africa agree on the amount of despite its absurdity. That is exactly what's funds needed to tackle climate change in de- happening." veloping countries, Mr Sarkozy said. The US must contribute to the proposed E7.2bn in In Hansen's view, the only way to cut emis- "fast start" financing, and the annual E100bn sions is through an ever-increasing tax on needed by 2020, he stressed. carbon emissions. He believes that the "car- bon tax" should start at around $1 per gallon The French and Ethiopian leaders said 40% of of petrol, with revenue returning directly to fast start funds should go to Africa, and that the public purse, according to the UK's Times 20% should be dedicated to measures for re- Online. ducing emissions from deforestation and for- est degradation, known as REDD, a proposal A tax would really encourage industries to made by Mr Sarkozy earlier this year. curtail their creation of harmful emissions, while passing along the costs to companies The two leaders also called for an "ambitious and people who insist on following a busi- reform of global governance" as part of the ness-as-usual approach. It would actually UN climate talks. They want Copenhagen to change people’s behaviour. "launch a process leading to the establishment of a World Environment Organisation", an Actually, Hansen has been talking about car- idea France has pushed for several years. bon taxes for years and his criticism against emissions trading is well known, but just be- fore the climate talks his statements found NASA Climate Expert wants Copenha- more echo in the media. gen to Fail and Calls for Carbon Tax [Saija Kononen, Thursday 17 December “Enfants terribles” in Copenhagen 2009] The US climate scientist James Hansen [Saija Kononen, Thursday 17 December announced a couple of days prior to the cli- 2009] The problem countries, the “enfants mate talks in Copenhagen that the talks must terribles”, of Copenhagen are the USA, China collapse if the world is to tackle global warm- and India. The USA will not do anything if ing effectively, many newspapers reported. China will not do and the other way round. Hansen is a leading climatologist and director The three countries are very different but they of NASA's Goddard Institute for Space Stud- have one thing in common: they all emit a l-o- ies; he was the main figure raising public t. China is already emitting more than the awareness of global warming in the USA at USA, although its per capita emissions are the end of the 80’s. Now Hansen's back in the still quite low. India is a transition economy, spotlight. He has raised eyebrows by saying emitting more and more, at the same time ar- that he does not hope for any agreement from guing that it cannot slow down the develop- Copenhagen. He said the "cap and trade" sys- ment in the country – the people have been tem for reducing greenhouse emissions, the suffering enough and have deserved to get system most countries are appealing for, is prosperous. You might have heard these even counter-productive. phrases, enunciated by some Western World representative, with some fear in his voice: He commented the system of trading with “What happens when the Indian people start pollution rights by saying: "This is analogous driving cars, when the Indian people start eat- to the indulgences that the Catholic church ing meat every day, when the Indian people sold in the Middle Ages. The bishops col- start watching TV….?” lected lots of money and the sinners got re- demption. Both parties liked that arrangement

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Here is an interesting piece of column, sum- is in our interest to have an agreement in Co- ming up the American reservations when it penhagen, because we are very vulnerable to comes to climate talks with China and India climate change," he said. "India will not be (by Sharon Begley, for the December News- found wanting in contributing to the interna- week): tional agreement to limit global temperature increases to 2 degrees C by 2020." That Will India and China agree to binding green- sounds encouraging, but he, too, made the house cuts this time? Because of geography, "we didn't cause this mess" point, saying that topography, and poverty, those two countries India's "per capita emissions will always be stand to suffer more than many others from less than the developed world's." (True, calamitous climate change. Yet at Monday’s though when you have 1 billion capita, total Climate Week kickoff, Su Wei, who as emissions add up: India is now the fifth- China's director-general of climate change largest emitter of carbon from the burning of will lead its delegation in Copenhagen, said fossil fuels.) And Ramesh also called for "the this: "We need to make sure progress on cli- beginning of a financial [mechanism] to un- mate change is based on the U.N. Framework derwrite [low-carbon] energy technology," Convention on Climate Change and the Kyoto which means rich countries subsidizing re- Treaty." Translation: just as Kyoto did not re- newables and the like in poor countries. quire China to commit to binding emissions cuts, Copenhagen better not either. And this: "For success in Copenhagen, developed coun- Russia and the Copenhagen Talks – a tries need to provide financing to support de- Sleeping Bear veloping countries, [and] agree to deeper [Saija Kononen, Tuesday 15 December emissions cuts." Translation: what we want 2009] Russian newspapers’ comments about out of Copenhagen is an agreement by which the first half of the climate summit were the developed world finances clean energy rather negative: “The international climate and climate adaptation in the developing change conference in Copenhagen has, by the world (which the UN estimates would be time it's struggled through the half of its $500 billion to $600 billion every year for agenda, got covered in rumours and contra- decades). And this: "I am confident we will dictions, all the way to shocking and shameful achieve an equitable agreement in Copenha- ones” (Voice of Russia). Copenhagen Confer- gen on the principle of equity." Whenever you ence is one of the rare international meetings hear China talk about "equity" in climate were Russia does not play a leading role. All talks, you can safely translate it is as "you the talk is of the US, China, and India – Rus- guys in the rich world caused this problem, so sia remains out of the press. don't expect us to agree to cut our carbon emissions as part of any international treaty." Russia has said it is ready to cut emissions of greenhouse gases by 25% to the level of The only silver lining in this cloud is that 1990s but only if a number of conditions is China seems willing to make voluntary emis- met. First of all G8 countries and BRIC coun- sions cuts. But in his Tuesday speech to the tries (Brazil, Russia, India and China) should U.N., President Hu Jintao vowed only to de- participate in the greenhouse gas emission crease China's "carbon intensity"—that is, the agreement. Also production technologies, amount of carbon dioxide produced per unit which enable the countries to cut hazardous of economic output. As economic output emissions, should become more available. For rises, therefore, so will CO 2. Russia the 1990-goal should not be too hard; Jairam Ramesh, India's minister for environ- in 2005, the former Warsaw Pact countries ment, was only slightly more conciliatory. "It

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were on average 35% below the emissions 1990 level. Russia’s energy efficiency poten- levels of 1990. tial translates into a CO 2 emissions reduction of 793 million tons of CO 2 equivalent per For international carbon market it would be year (about half of 2005 emissions).” important to get Russia to sign an agreement. Russia ratified the Kyoto Protocol in 2004. Finance sector makes voice heard at For now it has a surplus in signed Amount UN climate talks Units (AAUs) – the tradable emissions units. This surplus could be a risk for the interna- [EurActiv, Thursday 17 December 2009] Ex- tional carbon market. If the units were sold ecutives from Merrill Lynch and Goldman they could significantly undermine invest- Sachs spoke alongside former world leaders ment in domestic, and international, emissions in Copenhagen yesterday (16 December) to reductions. Downward pressure on carbon promote private finance as a way of helping prices would be substantial, and investment in poor nations switch to low-carbon energy emissions reductions in emerging markets sources. EurActiv reports from the Danish through the Clean Development Mechanism capital. and other means would all but dry up. At the Without urgent and concerted action, climate conference the Russian delegate vaguely said change will impact upon human welfare, Russia was not about to sell its greenhouse damage ecosystems and threaten global secu- gas quotas, at least not for the time being. rity, warned Ricardo Lagos, former president This is due to Russia's plans to concentrate on of Chile and president of the Club of Madrid, some joint projects with other countries. the world's largest forum of former presidents and prime ministers. Inefficient Giant Russia is the most energy intensive economy Lagos said concerted action implies not only per unit of GDP of the top ten energy con- public money to help developing countries to suming countries, and is number three in ab- invest in low-carbon technologies, but also to solute terms for energy consumption. So it is scale up private investments. to say that Russia is a large, inefficient, user "The Copenhagen focus is on public money. of energy – a major contributor to national There is almost no reference to the private greenhouse gas emissions. A joint IFC/Centre sector. We need to mix the two," said Timo- for Energy Efficiency paper states:”Russia can thy Wirth, a former US senator. save 45 percent of its total primary energy consumption. Russia’s current energy ineffi- A group of former investment bankers from ciency is equal to the annual primary energy Goldman Sachs and Merrill Lynch said the consumption of France. Achieving Russia’s private sector was ready take on the majority full energy efficiency potential would cost a of investments in low-carbon energy tech- total of $320 billion to the economy and result nologies. in annual costs savings to investors and end users of about $80 billion, paying back in just Yet negotiations for a post-Kyoto climate deal four years. Benefits to the total economy are have not yet adequately engaged the private much higher: $120-150 billion per annum of sector, they said. energy cost savings and additional earnings No shortage of capital from gas . Mohamed El Ashry, president of the United If its energy efficiency potential was to be Nations Foundation, explained that trillions of fully realized, Russian CO 2 emissions in 2030 dollars will need to be made available over would be approximately 20 percent below the

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the coming years to finance the switch to But the Merrill Lynch executive underlined clean energy production. that a more solid framework was needed to ensure a credible price for carbon. With such large numbers, "private investment must be at the front," El Ashry said. He feels http://www.euractiv.com/en/climate-change/finance- that there is "no shortage of capital" but the sector-voice-heard-un-climate-talks/article-188435 real challenge is to find ways to mobilise that capital to scale up low-carbon energy invest- Opinion: If Copenhagen fails, should the ments, especially in developing countries. EU adopt a CO 2 border tax? Proactive policies that put a price on carbon, [ENDS Europe, Monday, 30 November 2009] eliminate subsidies for fossil fuels and en- France and Germany want border adjustment courage the use of low-carbon products will mechanisms to protect the EU's competitive- provide assurances that a long-term market ness if CO 2 cuts are not agreed. But Sweden for clean technologies can be maintained, the and the environment commissioner have group argued. branded the idea as ‘eco-imperialism’. Two experts discuss "We have a long-term adventure ahead of us," said Tracy Wolstencroft, managing director at No - Reinhard Quick - Chair trade & environment Goldman Sachs, explaining that governments working group, BusinessEurope should guide and leverage private investments The principal justification for border by fostering an enabling environment with measures is the risk of carbon leakage. If stable regulatory framework and incentives. domestic measures to protect the climate impose too heavy a burden on industry, this Steering markets into the right direction could be tempted to migrate to countries with For Wolstencroft, markets need to be moved less strict climate policies. in the right direction, with support from gov- Proponents of border measures claim a win- ernments. "It is like a three-legged stool: you win result: both the climate and the need coordination between policy, technology competitiveness of the domestic industry are and capital. If they are not moving at the same protected. But we should avoid falling into speed the stool will be wobbly," he said. this protectionist trap. The carbon market is seen as a key element to If there is no agreement in Copenhagen, the pull clean technologies through the different introduction of border measures could lead to stages of development and bring them into the a destructive . The most likely mainstream. reason for a failure in Copenhagen will be a According to Abyd Karmali, managing direc- disagreement on burden sharing between tor and head of carbon markets at Merrill industrialised and emerging countries. Lynch, placing a global cap on emissions in If the EU were to impose border measures the context of a global cap-and-trade system against “climate sinners”, it would probably will create a strong incentive to reduce emis- start a trade war with huge and damaging sions and deploy the best and cheapest tech- consequences for European business, since nologies available. the target countries would most likely be the "CDM [Clean Development Mechanism] EU’s biggest export destinations – the US, markets have helped to promote renewable Russia or China. As the world’s largest export energy in developing countries," he said. economy, the EU would take a huge risk in attacking its biggest trading partners.

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Border measures would also be very complex countries. While industry only contributes to implement. The EU has adopted several 20%-30% of emissions in developed laws to combat climate change and it is countries, not tackling these emissions sets a discussing the possibility of increasing energy bad precedent for emerging economies where (carbon) taxes. But these policies do not apply industrial emissions represent a much larger to products. share.

They are based on caps of CO 2 emissions for Unless global carbon prices converge, full installations or taxes on energy consumption. auctioning could result in some industrial Applying taxes on imported products would production in certain sectors relocating. This create a bureaucratic and administrative would create jobs and emissions leakage. nightmare for importers. If the EU wants to avoid harming the international Without full auctioning, developed countries competitiveness of its industry, it should will not capture emission reduction potentials ensure that industry views are taken on board in their industrial sectors. Free allowance in the design and implementation of policies allocation based on benchmarks based on like the ETS. output or activity levels constrains innovation in low-carbon production and processes. In An EU border might also addition, it largely mutes the carbon price encourage countries that want to exclude EU signal for industry and consumers of carbon- exports from their markets to pursue a similar intensive commodities. policy. Suppose an emerging country with Without a move towards innovative and low- high population and low per-capita CO 2 emissions adopted border measures based on carbon alternatives, emission reductions are a containment of per-capita emissions. limited to a 10-20% efficiency improvement potential. Under such a system all exports from the US and the EU would probably be subject to such Arguably, direct regulation or strategic measures. What would prevent China or India deployment policies might temporarily from pursuing such a policy, if the EU opened replace a muted carbon price signal. However, the Pandora box of climate change while such policy instruments are effective in protectionism? the power sector or for domestic consumers, they are difficult to design for complex Unilateral domestic climate actions coupled industrial production processes. with border measures are nothing but a new form of protectionism and as such should be Border adjustment creates a clear economic, rejected. political and legal case for full auctioning, even if carbon prices should remain Yes- Karsten Neuhoff - Research director, DIW differentiated across regions. As long as the Berlin adjustments follow some important basic design features, such measures could work Border measures are politically contentious, well. having been abused in the past against developing countries. If unilaterally applied, It is important to assume that all imported they risk undermining international goods are produced with best available cooperation on climate policy. technology, thus avoiding discrimination towards third countries. Full auctioning Still, they deserve consideration as an should be implemented jointly with border essential tool to deliver emission reductions adjustment in order to be compatible with and industrial transformation in developed WTO rules. And to avoid non-tariff barriers,

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substances that qualify for border measures "This tax is discriminatory with regard to gas should be strictly constrained. and oil and is not in the interests of producing countries and is also not in the interest of de- Using net revenue from border adjustment veloping countries," Khelil, a former Opec and a share of auction revenue to support president, added. developing countries would satisfy the need for common but differentiated responsibility. http://www.upstreamonline.com/live/article201791.ece The political challenge of a contentious policy instrument would then make way for The Copenhagen Accord explained international cooperation to create a shared [Luke Walsh, Environmental Data Interactive understanding around the narrowly defined Exchange, Monday 21 December 2009] Fol- objectives of border adjustment, and to lowing two weeks of tense talks delegates at outline rules for a common approach. Copenhagen's COP15 have presented the world with an Accord. OPEC fighting against adoption of car- The Copenhagen Accord stops short of being bon tax in Copenhagen legally binding but does have some powers. It [Dpa, Wednesday 16 December 2009] Algiers is operational now and will be reviewed in - The oil cartel OPEC is fighting tooth and 2015 when it could be improved depending nail to prevent the adoption of a tax on green- on new agreements and the scientific evidence house gas emissions at the climate summit in then. The Accord starts: "We underline that Copenhagen, Algerian Energy Minister climate change is one of the greatest chal- Chakib Khelil said Wednesday. lenges of our time. "We emphasise our strong political will to urgently combat climate 'There is a very clear consensus within OPEC change in accordance with the principle of to reject this discriminatory tax,' he told common but differentiated responsibilities Chaine 3 radio. and respective capabilities." Khelil said that members of OPEC were The Chinese delegation proved to the sticking meeting with officials from African countries point in making any Copenhagen deal more to arrive at a common position on the so- meaningful. China refused to agree to an in- called carbon tax. ternational emissions monitoring, but has said it would measure then itself and report the http://www.monstersandcritics.com/news/europe/news/ article_1519522.php/OPEC-fighting-against-adoption- findings. Along with other developing coun- of-carbon-tax-in-Copenhagen#ixzz0Zw3mfr24 tries this will be done on a two year reporting schedule, apparently due to start in 2011. [upstreamonline.com, Wednesday 16 Decem- Chinese Premier, Wen Jiabao, denied block- ber 2009] […]Khelil said carbon taxes would ing any deal saying today (December 21) his cut into the revenues of energy producers and country had 'played an important and con- make energy more expensive for de- structive role' in pushing the Copenhagen veloping countries. climate talks. "There is a consensus that is very clear. The However, the Accord also says nothing about countries of Opec have been working for a limiting pollution and while it's described by very long time on this issue," the news agency delegates as 'politically binding' in reality it quoted him as saying on Algerian state radio. has no legal ramifications and there's no time- "The producers will be penalised." scale for changing that. The deal protecting rainforests by paying developing nations to protect them, Reducing Emissions from De-

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forestation and forest Degradation (REDD), “This summit has been a complete failure - has been agreed. But, as with other parts of the climate accord should be sent to the recy- the Accord, there is no timescale in place and cling bin.” it's unclear how it will be funded with only limited cash put forward so far. “The developed world, which has done most to create this crisis, must face up to its global Arguably the Accord biggest success is an responsibilites with a strong and fair agree- agreement to keep world temperatures below ment within months.” 2C, which is an achievement, but one that Non Government Organisations (NGOs) were “Time is running out - we need bold action lobbying for more on at the talks. Cash will not more short-sighted, short-term self- be offered to the developing world to help interest.” them adapt to climate change and to invest in Angela Merkel, German Chancellor green technologies - nations also agreed to share their green technology but again set no “This breakthrough lays the foundation for in- date for starting this. The Accord appears to ternational action in the years to come." show $30billion earmarked for this up from 2010 to 2012, but a sticking point throughout “Copenhagen is a first step toward a new the talks remains, with developed countries world climate order, nothing more but also remains with no obvious sign for who pays nothing less. Those who are only putting Co- what. penhagen down are helping those who want to blockade rather than move forward." http://www.edie.net/news/news_story.asp?id=17447&c hannel=0&title=The+Copenhagen+Accord+explained+ Yang Jiechi, Chinese Foreign Minister Copenhagen Accord: “With the efforts of all parties, the summit yielded significant and positive results." http://unfccc.int/files/meetings/cop_15/application/pdf/ cop15_cph_auv.pdf Jairam Ramesh, Indian Environment Minister United Nations Framework Convention on called it a “good deal” and said that India had Climate Change : “upheld the interests of developing nations” http://unfccc.int/2860.php and their “national sovereignty”. Dmitry Medvedev , Russian President Copenhagen Accord – Reactions said the summit had achieved “quite modest” [Reactions collected by Saija Kononen, Mon- results. His aides, however, blasted the two- day 21 December 2009] week UN conference as “one of the most Andy Atkins, Executive Director, Friends of the poorly organised top-level events ever”. Earth Greenpeace Russia dismissed it as “ignomini- ous” and “futile”. “The US appears to be more interested in sav- ing face than saving the planet.” Tim Groser, New Zealand’s negotiator “They are now using strong-arm tactics to didn't think developed countries were to bully the developing world into backing a blame: “They were presented with a confer- plan that completely undermines the existing ence that was complete madness, that was UN process and does little to diminish the blocked by extremist procedural tactics,” growing threat of catastrophic climate change. This is completely unacceptable.” “I hope they will reflect, just as we are reflect- ing, on why exactly this conference got

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bogged down to the point where it produced, per cent, we could have been in a better posi- out of a mighty roar, just a little tiny result.” tion at this point. The UK Government showed determination in identifying the scale Walter Russell Mead, Council on Foreign Rela- of international funding necessary, and the tions, USA emissions cuts required to make any sort of “The big winner: Barack Obama. Active and acceptable deal. We look to Brown for con- unconventional personal diplomacy enabled tinued leadership in coming weeks to salvage President Obama to dominate the global a fair, ambitious and binding agreement.” summit like no other figure. Whatever you “While today's declaration is deeply disap- think of the result, this showed who the most pointing, industrialised countries have been important world leader really is. given until February to commit to their emis- “The big loser: Europe. One hundred years sion reduction pledges. It is vital that they ago, Europe literally ruled the world. Climate take this opportunity to increase ambition, and change is the issue that Europe has tried to close the huge loopholes in the current targets make its own. Europe wasn’t in the room - without more ambition, this deal is headed when the Big Five cut the Copenhagen deal, for dangerous levels of warming.” and the deal didn’t give Europe very much. “Governments must also act urgently to set I’ve written before that much of Europe looks out a clear timetable for when a legally bind- at America the way Wile E. Coyote looks at ing agreement will be reached - the world is the Road Runner. The coyote is smart, sophis- still awaiting the leadership it needs.” ticated and technically savvy. The roadrunner is an ignorant buffoon. Yet, somehow, the Le Monde, French News Paper coyote never catches the roadrunner. This week, the coyote fell off yet another cliff “China is at the heart of Copenhagen's fail- while the roadrunner sped off. Beep! Beep!” ure.” Barack Obama, U.S. President Gordon Moffat, director general of European steel industry association EUROFER called the accord a “breakthrough” which laid “the foundation for international action in the “The Copenhagen deal is a disappointment. years to come”., but he said it still “not We had hoped that an agreement in Copenha- enough. gen would have resulted in a global level playing field between industrial competitors David Nussbaum, Chie Exceutive, WWF, U.K. worldwide. Until an agreement is reached which results in comparable efforts by indus- “They may think it's all over, but this deal is tries worldwide the EU must maintain the far from done. After years of negotiations we measures foreseen to protect the competitive- have reached a declaration of will which cur- ness of European industry.” rently binds no-one and fails to guarantee a safe climate for future generations. As it Gordon Brown, British Prime Minister stands, this weak accord will not keep global warming below the dangerous level of 2 de- said a new global body dedicated to environ- grees.” mental stewardship is needed: “Never again should we face the deadlock that threatened to “If the gaps between rhetoric and reality are pull down those talks. Never again should we not closed, this deal could cost millions of let a global deal to move towards a greener lives and hundreds of billions of dollars. If the future be held to ransom by only a handful of EU had only responded with ambition earlier countries. One of the frustrations for me was in the process and moved unilaterally to 30

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the lack of a global body with the sole respon- But only Paris understood this letter as state- sibility for environmental stewardship.” ment for climate tolls.

Francois Fillon, French Prime Minister There has been discord between the U.K. and China in the aftermath of the summit. For “France, like all of the European Union, British Climate Minister Ed Miliband, China would have wanted the Copenhagen Accord was the main reason for the failure. According to go a bit further. But there is an agreement.” to China, Miliband’s „attack“ in Guardian Ed Miliband, the Climate Change Secretary, U.K. was aimed to „shrink from the responsibilities of the industrialised countries towards devel- “disappointing” oping countries and to raise dispute among the developing countries”. In addition, Chi- Sweden calls the summit a „disaster“ nese spokesman said, there was a broad alli- ance of developing countries opposing the [Spiegel, Tuesday 22 December 2009, sum- paper. marised by Saija Kononen] The result of Co- penhagen is a disaster, Environment Minister British government should “revise the mis- Carlgren said. After British Foreign Minis- takes” and “earnestly meet its responsibilities ter’s accusations, China and U.K. quarrelled. towards developing countries”. Chinese spokesman underlined that China, on the con- No EU politician has been so open and criti- trary, “undertook eager efforts” in finding a cal about the summit in Copenhagen. Europe good solution in Copenhagen and at the same should move on after the “disaster of Copen- time in defended the rights of developing hagen”, Swedish Environment Minister countries. pleaded at the last EU council under his coun- try’s leadership. EU has to find alternative ways in climate protection, he said. 6. LINKS AND PUBLICATIONS In countries like France and Belgium the peo- ple have started pleading for a carbon tax on the EU borders. It could prevent European in- 30th November 2009, What taxation for a dustry from suffering from competitive disad- low carbon economy? vantages, Belgian Environment Minister Paul Magnette said. The climate tolls would be This meeting aimed primarily at supporting aimed against countries like China whose ob- the Swedish and Spanish EU presidencies ligations to the industry are far lower and with the forthcoming revision of the Energy which were seen to brake the summit. Chi- Taxation Directive. As part of the revision nese government said already during the process the European Commission (Director- summit that such a CO2 tax would disadvan- ate General for Taxation and Union) tage its trade and ecologic development. hosted this conference in Brus-sels on No- vember 30th 2009. Many GBE members were Germany did not show enthusiasm for such in attendance, including Paul Ekins as a charges. Federal Environment Minister Nor- speaker. Vice-Spokesman Kai Schlegelmilch bert Röttgen (CDU) advised against “state-run was invited to chair the final discussion which dirigisme”. Chancellor Angela Merkel (CDU) can be seen as webstream. The video and all has also been reserved, although she, already other informations concerning the conference in September, together with French President can be seen at: Nicolas Sarkozy, demanded measures against http://ec.europa.eu/taxation_customs/taxation/gen_info countries not signing the climate agreement. /tax_conferences/low_carbon/index_en.htm

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The webstreams are also available on: synthesised in a box and described in detail in the country chapters of the report. Moreover, http://www.foes.de/veranstaltungen/dokumentationen/2 009/externe-veranstaltungen/ this year's edition contains a new set of envi- ronmental data (tax revenues raised on the transport use of fuel), as well as increased Taxation trends in the European Union coverage of the data on the top rate of the per- 2009 edition sonal income tax and corporate income tax.

This report contains a detailed statistical and http://ec.europa.eu/taxation_customs/taxation/gen_info economic analysis of the tax systems of the /economic_analysis/tax_structures/index_en.htm Member States of the European Union and Norway. The data are presented within a uni- Scorecards for Best and Worst Environ- fied statistical framework (the ESA95 harmo- nised system of national and regional ac- mental Policies counts), which makes it possible to assess the A German Watch study commissioned by the heterogeneous national tax systems on a fully WWF and E3G presents the best and the comparable basis. worst policies by examining their effects on environment and economy at the same time. The standard classifications of tax revenues The paper “Scorecards for Best and Worst (by major type of tax or by level of govern- Policies for a Green New Deal” gives points ment) presented in most international tax for the policies in three categories: green ef- revenue statistics are hard to interpret in eco- fects, economic effects and outreach. Each nomic terms. This publication stands out for category is divided into subcategories and for offering a breakdown of tax revenues by eco- every subcategory 3 points is the maximum. nomic function (i.e. according to whether they In the first category the policy can score by: are raised on consumption, labour or capital). This classification is based on disaggregated • short-term effect on emissions tax data and on a breakdown of the revenue • long-term effect on emissions from the personal income tax. In addition, the • lock-in effect (positive/negative) report contains indicators of the average ef- • fective tax burden on consumption, labour and other significant environmental ef- and capital, as well as data on environmental fects taxation and on the top rates for the personal and corporate income tax. In second category the possible scorepoints are: Country chapters give an overview of the tax • system in each of the 28 countries covered, financial benefits and costs to society the revenue trends and the main recent policy • employment effects changes. Detailed tables allow comparison • barrier (removal / enhancement) between the individual countries and Euro- • triggering innovation pean averages. Data cover the 1995-2007 pe- riod and are presented both as a percentage of In the “outreach” category the only chance to GDP and as a percentage of total taxation. score is “applicability in other countries/ scal- ability”. This year's edition of Taxation trends in the European Union appears at a time of up- Germany’s “efficiency in buildings” pro- heaval. The report takes stock of the tax pol- gramme got the highest score. It reduces icy measures taken by EU governments in re- emissions, new jobs have been created and it sponse to the global economic and financial could easily be implemented in other coun- crisis up to spring 2009. These measures are tries. Germany’s feed-in tariff for renewable

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electricity was also praised, as well as Mex- “Environmental taxes work : numerous studies, ico’s Bus Rapid Transit (BRT) system, the including those of the Green Fiscal Commis- USA’s Weatherization Assistance Program sion, have shown that green taxes are effec- providing energy-efficiency support for low- tive in reducing the environmental impacts on income homes and 9 other policies. The three which they are targeted.” worst policies were: 1) local coal-mining sub- sidies, 2) preferential treatment of energy- “The UK’s 2020 greenhouse gas targets could intensive industries, and 3) subsidies for nu- be met through green fiscal reform : the eco- clear power production. nomic implications of doing so would be broadly neutral, and the green fiscal reform You can download the study here: policy approach would increase employ- ment.” http://www.germanwatch.org/klima/score09g20.pdf “The impacts of green fiscal reform on com- Coolproducts.eu petitiveness can be mitigated : relatively few economic sectors would face serious chal- Green Budget Europe is now a supporter of lenges to their competitiveness from green the manifesto of the coolproducts.eu, “Cool fiscal reform, and there are a number of ways products, Warm Homes”. in which these concerns can be addressed.” http://coolproducts.eu/manifesto/ You can download the study on our website: The main demands are: http://www.foes.de/publikationen/studien/ 1. Adopt a mandatory EU 20% energy saving target by 2020 to support our commitment Carbon Tax – a Forgotten Climate Policy to energy conservation. 2. Establish more coherent legislation to close Tool? gaps and set clear responsibilities. Carbon taxes seem to be a forgotten policy 3. Boost the energy performance and renova- tool in the climate policy debate, and there are tion rate of existing buildings in the EU. several misconceptions regarding their use

4. Allow only the greenest heating and cooling and effectiveness. In this report, the Swedish products to reach the market. 5. Redirect finance where it matters. think-tank Global Utmaning (Global Chal- lenge) analyses the theories and evidence re- Coolproducts is a campaign to set ambitious garding carbon taxation, and presents 10 prin- minimum requirements for energy efficiency ciples on carbon taxation. and other environmental aspects of products sold in the European Union. The report finds that: http://coolproducts.eu/ • Carbon and energy taxes can be envi- ronmentally efficient in terms of reduc- The Case for Green Fiscal Reform - Fi- ing carbon emissions. nal Report of the UK Green Fiscal • A green , i e shifting the tax Commission burden from taxation of labour to taxa- tion of carbon and energy, can have a A new study of the Green Fiscal Commission small positive impact on GDP. examines the possibilities and effects of a • green tax shift in the UK, such that 15-20 per The effect of carbon taxes on income cent of the UK’s tax revenues come from en- distribution tends to be regressive in de- vironmental taxes by 2020. Here are some of veloped countries. the key messages of the study: • And seems to be progressive in devel- oping countries.

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• Carbon taxes and emission trading sys- national implementation of rational energy tems are compatible and complement pricing policy. each other, since they are suited for dif- ferent sectors of the economy. The data preview 2009 provides information on: • Several European countries have im- plemented both carbon taxes and emis- – Diesel prices in more than 170 sion trading systems with good results countries – Gasoline prices in more than 170 during several years. countries • A careful selection has to be made when Here is the link to see the data: combining taxes, emissions trading sys- http://www.gtz.de/en/themen/28260.htm tems and other climate policy instru- ments. Deutsche Bank on Climate taxes • A carbon tax should be introduced at a low level and gradually increased, and Even Deutsche Bank has seen the advantages tax increases should be announced well of environmental taxation. In a recent study in advance, in order to allow for adapta- they state that “climate tax” could be an effec- tion by households and companies. tive way to bring more money to the treasury, now that it is the main issue of many coun- • It is necessary to adapt tax policies to tries suffering from the financial crisis. Click country-specific situations. here to see the study (in German): The report can be downloaded at http://www.foes.de/pdf/DBR_Kllimasteuer.pdf http://www.globalutmaning.se/upl/files/35153.pdf List of Environmental Taxes in Finland International Fuel Prices You can find a list of all environment-related Fuel taxes are an important source of revenue taxes and charges in Finland on the website of for the financing of the transport sector in that Finnish Environmental Ministry. Here is the they charge road user the costs of transport in- link: frastructure. Furthermore, numerous countries http://www.environment.fi/default.asp?contentid=2996 earn revenues through taxation on petroleum 89&lan=EN products, which can be used for reducing pub- lic transport fares or providing social services This link: such as schools and healthcare. In line with http://www.environment.fi/download.asp?contentid=85 the polluter pays principle, fuel taxation can 625&lan=en shift the burden of the indirect negative ef- fects of transport (so-called external costs of gives information about tax rates and reve- transport such as environmental pollution, nues. noise, congestion costs, etc.) onto transport users. Carbon Tax Center “International Fuel Prices” is a long-time ef- The American “Carbon Tax Center” is a fort of GTZ on behalf of the German Federal lobby group for carbon tax in the U.S. also Ministry for Economic Cooperation and De- giving useful information on carbon tax in velopment to provide decision-makers with general. data on fuel prices on a global scale. The worldwide transparency and comparability of http://www.carbontax.org/ fuel prices is an important step towards the

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7. EVENTS The whole conference will be accessible online in real time (i.e. there will be live web- streaming), which means that anyone in the GBG Conference, Annual General Meet- world with Internet connection will be able to ing and Adam Smith Price 2010 follow the conference, and make comments 23 th /24 th April 2010, Berlin and ask questions to the speakers by e-mail, which can be answered right away – time On April 23 rd , 2010 GBG will organise a con- permitting. ference in which the feedback of trade unions, youth organisations, environmental NGOs The conference is planned to be free of and churches to our EFR concepts will be fol- charge, and the organisers will strive to reim- lowed up. The discussions will take place burse travel and accommodation costs for the with stakeholders from different social sec- speakers, if necessary. All help for securing tors. funding for the conference is welcome. In the evening a person, which acquired mer- The proposed main topics of the conference its in promoting the use of MBI, will be are the following: awarded the Adam Smith Price 2010. The 1. Environmentally Harmful Subsidies and their price will be granted during a ceremonial act Elimination with a speech of Dr. Anselm Görres and the person awarded. The EU SDS strategy (2006) called on the

th European Commission to draft a roadmap for On April 24 , the Annual General Meeting the removal of EHS in all relevant sectors. In will take place. All members and friends are order to support the implementation of the invited to take part in the assembly. There, roadmap DG ENV commissioned a study for besides the legally defined agenda items, providing practical guidelines for EHS re- GBG will discuss about important develop- moval and indicators to enable policy makers ments and the GBG strategy. to get a sense of the level and character of the subsidies. The draft version of the study was GBE Annual Conference 2010 presented at a workshop http://www.ieep.eu/whatsnew/newsitem.php?item=207 The 2010 GBE Annual Conference will take th th in Brussels in September 2009. It is hoped place on July 8 and 9 (Thursday and Fri- that the GBE Annual Conference will further day) in Budapest. The site of the event is the stimulate the Europe Commission to draft the conference room roadmap for the elimination of EHS. http://www.andrassyuni.hu/deutsch/admin/data/000000 01/_fix/00000000/_fix/00000004/_subpage/images/ori It should be emphasised that external envi- ginal/image0001.jpg?1968753122 ronmental costs are also implicit subsidies, which should also be eliminated by the appli- of the Andrássy University cation of appropriate taxes and charges. http://www.andrassyuni.hu/deutsch/list.php?konyvtar= 2. Communicating Green Budget Reform. admin/data/00000001/_fix/00000000/_fix/00000004&i d=0 During the recent years a lot of experience has in the centre of Budapest. been accumulated concerning good and bad practices associated with the communication The local organiser of the Conference is the of GBR. Presentation and discussion of the Clean Air Action Group www.levego.hu most important findings during the conference (CAAG) in cooperation with the Hungarian will help improve the communication of Economic Association. GBR.

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Please send your suggestions for detailed pro- proposes a reform of Europe’s carbon taxa- gram and speakers to András Lukács (lukacs tion, concerning both the emission permits [at] levego.hu). market and Europe’s various carbon tax re- gimes. The authors survey the unhealthy trend AGRION Business Network for Energy of carbon emissions in the EU and look Cleantech, sustainable Development closely at the instruments available to fight th climate change: emission permits market, 14 January, Frankfurt regulation, and environmental tax. There will be many events organised by AGRION next year, starting with “Cleantech More information and inscription: th Investments in Germany in 2010” 14 Janu- http://www.notre- ary. To see the whole list, please go to the europe.eu/fr/agenda/publication/presentation-de-letude- homepage of AGRION: une-union-sans-cesse-moins-carbonee-vers-une- http://www.agrion.org/sessions/agrion-de- meilleure-fiscalite-europeen/ Cleantech_Investments_in_Deutschland_2010.htm . The 11th Global Conference on Envi- Présentation de l'étude "Une Union sans ronmental Taxation cesse moins carbonée ? vers une meil- 3 - 5 November 2010, Bangkok, leure fiscalité européenne contre le THAILAND changement climatique The 11 th GCET provides an international, in- In the aftermath of Copenhagen and at the terdisciplinary forum to explore issues in- moment Europe prepares to put sustainable volved in designing and implementing envi- development at the centre of its growth strat- ronmental taxes. The conference is not in- egy, the study by Laurent and Le Cacheux tended to advance any particular environ- calls for a reconsideration of the effectiveness mental agenda on an advocacy basis but of Europe's economic instruments against rather to advance knowledge, understanding, climate change. The study will be presented and debate. in Hotel Crown Plaza Europa 107 Rue de la th More Information is available here: Loi in Brussels on January 14 . The study http://www.acc.msu.ac.th/gcet2010/index.php

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8. IMPRINT

Best wishes from the founders and the editors!

Green Budget Germany’s Team of Editors You can contact the Green Budget News editors at the following addresses:

Forum Ökologisch-Soziale Marktwirtschaft European Environmental Bureau Green Budget Germany Boulevard de Waterloo 34, Seestraße 113 – D – 13353 Berlin B-1000 Brussels Tel.: +49 30 510 530 -80, Fax: - 79 Tel: +32 2 2891090 [email protected] Fax: +32 2 2891099 www.foes.de [email protected] www.eco-tax.info www.eeb.org Levego Munkacsoport The Ecological Council Clean Air Action Group Blegdamsvej 4B H-1465 Budapest, Pf. 1676, Hungary DK - 2200 Copenhagen N Phone: +36-1 4110509/-10 Phone: +45 33 15 09 77 Fax: +36-1 2660150 Fax: +45 33 15 09 71 [email protected] [email protected] www.levego.hu www.ecocouncil.dk ÖGUT – Österreichische Gesellschaft für Umwelt und Technik Austrian Society for Environment and Technology Hollandstraße 10/46 A – 1020 Vienna